Buyers move Supreme Court against government move to tweak Insolvency Code
Real Estate

Buyers move Supreme Court against government move to tweak Insolvency Code

The Supreme Court on January 13, 2020, started hearing a bunch of petitions, which challenge the Centre’s move to make amendments in the Insolvency Code, making it diffic...

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

The Supreme Court on January 13, 2020, started hearing a bunch of petitions, which challenge the Centre’s move to make amendments in the Insolvency Code, making it difficult for individual buyers to launch action against real estate builders.With an aim to prevent ‘frivolous triggering’ of insolvency proceedings and to safeguard the interests of companies taking over a stressed firm after the resolution process, the Union Cabinet, on December 11, 2019, approved several amendments to the over three-year-old insolvency code.Among other decisions, the government introduced a provision in the law that introduced a threshold of at least 10 per cent of homebuyers in a project or 100 of the total allottees for initiating corporate Insolvency Resolution Process (IRP) against a builder.This is the fourth time that the Insolvency and Bankruptcy Code (IBC) is being amended, after being introduced in 2016. Apart from an amendment in various sections, a new Section, 32A, is also being introduced in the Code. The Bill seeks to amend Sections 5(12), 5(15), 7, 11, 14, 16(1), 21(2), 23(1), 29A, 227, 239 and 240.According to Proptiger.com, the amendment in Section 7 of the Code may curb an individual homebuyer’s freedom to initiate corporate insolvency proceedings against a builder. The 10-per-cent threshold could make it difficult for small creditors to initiate insolvency proceedings, by ensuring that the IBC is not invoked for small amounts.There have been several instances in the recent past, where individual homebuyers have moved the National Company Law Tribunal (NCLT) to launch insolvency proceedings against a builder.The position of companies that take over another company after a resolution process under the Insolvency Code also stands more protected now. Under the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019, which may be introduced in the ongoing session of Parliament, enforcement agencies will be prohibited from attaching assets of companies acquired by a successful bidder after a resolution process, for the criminal offences committed by the previous owners. In several instances, the Enforcement Directorate and other central and state agencies have seized assets of stressed companies, even after the resolution process.Says a Proptiger.com report: By amending Section 29A, the government will also significantly limit the number of companies that can bid for the ownership of a stressed company. The Code already prohibits defaulting promoters and related parties from taking part in a resolution process. Through this amendment, the definition of the ‘related parties’ is likely to be widened.In what could come as a major relief for stresses companies, the Cabinet has also decided that the licences, permits, concessions and clearances granted to the corporate debtors cannot be terminated or suspended or not renewed during the moratorium period.To boost funding in the financially stressed sectors, the Cabinet has also approved amendment in the Code to protect last-mile funding. “The amendments in the Code aim to remove certain difficulties being faced during insolvency resolution process to realise the objects of the Code and to further ease of doing business,” the government said in its official release.

Next Story
Infrastructure Energy

Centre Prioritising Energy Security With Coal Gasification

Union minister for Coal and Mines G Kishan Reddy said the Centre is prioritising energy security through a strategic shift to coal gasification and has announced incentives totalling Rs 460 billion (bn) to support the effort. He said more than 35 companies will start coal gasification activities in India within two months and that the government is encouraging firms that bring technology to close the domestic technology gap. The minister described the initiative as aimed at reducing import dependence and developing indigenous capacity. India has the fifth-largest coal reserve in the world, and..

Next Story
Infrastructure Urban

BHEL and Coal India Invest Rs 250 bn in Odisha Gasification

Bharat Heavy Electricals (BHEL) and Coal India (CIL) are jointly investing Rs 250 billion in a coal gasification project in Odisha, with the Prime Minister laying the foundation stone in Jharsuguda. Union Coal and Mines Minister G Kishan Reddy described the initiative as a transformative shift in coal utilisation that will open industrial avenues for the state. The project moves coal beyond conventional power generation to industrial feedstocks. Coal gasification will convert coal into synthesis gas, a versatile feedstock for chemicals, fertilisers and synthetic fuels, and the technology is ex..

Next Story
Infrastructure Energy

BCCL Hands Over Dugdha Coal Washery To JSW Steel

Bharat Coking Coal has handed over the Dugdha Coal Washery to JSW Steel, marking the first coal washery asset monetisation under the Ministry of Coal's asset monetisation programme. The handover took place in the presence of senior officials from Bharat Coking Coal Ltd, JSW Steel and JSW Energy. The washery has a capacity of two million tonnes per annum (mn t per annum), and its transfer is intended to introduce private sector practices into coal beneficiation operations. The monetisation is aimed at modernising coal sector assets, improving operational efficiency and enhancing resource utilis..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement