JAYPEE HOME BUYERS MAY GET ‘CLIENT’ TAG COVER
Thosewho have booked apartments with Jaypee Infratech
may not need to fill up any form to protect their interests in the insolvency proceedings. Plus, to ensure that their interests are protected, along with those of institutional lenders like banks and other financial institutions, the government is planning to insert a new category of “clients” with rights in the insolvency proceedings. A senior government official confirmed that discussions were on between the ministries of corporate affairs and finance to work out the details.
Those who have booked apartments with Jaypee Infratech may not need to fill up any form to protect their interests in the insolvency proceedings.
Plus, to ensure that their interests are protected, along with those of institutional lenders like banks and other financial institutions, the government is planning to insert a new category of “clients” with rights in the insolvency proceedings.
A senior government official confirmed that discussions were on between the ministries of corporate affairs and finance to work out the details. "The government will ensure homebuyers do not suffer," the official said.
As real estate companies such as Jaypee Infratech are being dragged into insolvency proceedings by their lenders, mostly banks, fear has set in among those who had booked flats with these companies that the money they had put in to buy homes with these builders might be wiped out.
The banks have moved after waiting for years to recover their sunk investments in many of the projects floated by many real estate companies at the height of the housing bubble. The banks have used the recently created Insolvency and Bankruptcy Code, 2016, enacted by Parliament. Under the Act, lenders can ask the insolvency courts to seize the assets, mostly the buildings constructed by the real estate companies, to square off against their loans. But homebuyers stand on a different footing as they are not lenders to the projects.
Recognising the problem, the government agencies are working to amend the definition of lenders to include them as clients whose interests will be on the table and, thus, protected. In the specific case of Jaypee, while the Insolvency and Bankruptcy Board had devised a form last week for the homebuyers to fill, the government has decided that even if any buyer fails to provide any details by August 24, his interests would be protected.