IBBI heralds shift in liquidation process, brings relief to home buyers

Insolvency regulator IBBI has introduced significant changes to the liquidation process, providing relief for specific home buyers and requiring a key role for a stakeholder consultation committee (SCC), made up of creditors of the company under liquidation, in essential operational aspects overseen by the liquidator.

The latest move of Insolvency and Bankruptcy Board of India (IBBI) is expected to bring confidence to the stakeholders in the liquidation process.

Home buyers with allotted and possessed housing units in stalled projects can now rejoice as their homes are now protected from being included in the “liquidation estate” of such projects. 

Put simply, liquidators are prohibited from selling these already allotted and possessed housing units as part of the liquidation process, as per the latest amendments to liquidation process regulations, say experts.

Hari Hara Mishra, CEO, Association of ARCs in India, said relief has been extended to homebuyer by exemption of allotted housing under possession from liquidation estate.

The latest amendments in liquidation process regulations have put the creditors of a company in liquidation in the driver’s seat, empowering the SCC to have meaningful say on various issues including early dissolution of the corporate debtor, private sale of its assets and sale of the corporate debtor as a going concern.

Hitherto, a liquidator had unfettered powers in the decision making around liquidation process.