THE GOVERNMENT IS rethinking a plan to amend the law to empower the Committee of Creditors (CoC) to seek separate insolvency resolution proposals for each real estate project by changing the current system, where a failed project necessarily brings the entire firm under the process.
Official sources told FE that the review is in the wake of the contention among a section of the government that the provision could potentially be misused by errant developers to siphon off funds from specific projects. Even the safeguards built in the Real Estate (Regulation and Development) Act (Rera) and Insolvency and Bankruptcy Code (IBC) might not be effective to prevent such fund diversions, if projectspecific insolvency resolution is allowed, they said.
The Insolvency and Bankruptcy Board of India (IBBI) mooted the concept of project-specific insolvency for the real estate sector in a discussion paper floated in November. The rationale behind the proposal was that such resolution would generate heightened interest in the assets among potential bidders and help arrest value erosion.
This story is from the December 19, 2023 edition of Financial Express Mumbai.
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This story is from the December 19, 2023 edition of Financial Express Mumbai.
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