President approves promulgation of IBC amendment Ordinance to treat home buyers as creditors

New Delhi: President Ram Nath Kovind on Wednesday gave his assent to the ordinance amending the Insolvency and Bankruptcy Code (IBC) 2018.

The Ordinance provides significant relief to home buyers by recognizing their status as financial creditors.  

“This would give them due representation in the Committee of Creditors and make them an integral part of the decision making process.  It will also enable home buyers to invoke Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against errant developers,” a government release has said.

Another major beneficiary would be Micro, Small and Medium Sector Enterprises (MSME). The Ordinance empowers the Government to provide them with a special dispensation under the Code.  The immediate benefit it provides is that, it does not disqualify the promoter to bid for his enterprise undergoing Corporate Insolvency Resolution Process (CIRP) provided he is not a willful defaulter and does not attract other disqualifications not related to default.  

It also empowers the Central Government to allow further exemptions or modifications with respect to the MSME Sector, if required, in public interest.

The Ordinance also provides for a mechanism to allow participation of security holders, deposit holders and all other classes of financial creditors that exceed a certain number, in meetings of the Committee of Creditors, through the authorized representation.