REVISED REGULATIONS OF THE INSOLVENCY LAW IN INDIA

Recently, the National Company Law Tribunal had admitted the application of the Industrial Development Bank of India (IDBI) to initiate insolvency proceedings against the developers, Jaypee Infratech Ltd for default on repayment of loans. As a result, a number of flat buyers in the National Capital Region protested against the undue delay on the part of Jaypee Infratech Ltd in the delivery of constructed flats due to paucity of funds. They further argued that the developers should not be allowed to take shelter under the Insolvency and Bankruptcy Code 2016 (the Code) as it allows only the financial and operational creditors to seek claims from the debtor. This would leave the other creditors high and dry without any money.

Therefore, the Home Buyers’ Group made the following appeal to the Government:

1. To make amendments to the Code to prioritize home-buyers’ interest in insolvency proceedings,
2. To provide powers to the regulators of the real estate sector through the Real Estate (Regulation and Development) Act, 2016, to attach assets of all the companies under Jaypee Infratech Ltd, including their personal wealth, in order to arrange funds for completion of unfinished projects, and
3. To restrict the banks from collecting EMIs from the home buyers, who are stuck in delayed projects.

Therefore, to resolve one of the issues, the Insolvency and Bankruptcy Board of India has amended some regulations in the Code, namely, Regulation 9A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2017, to enable persons who have to receive a payment from a company undergoing corporate insolvency resolution process, to seek the claim by submitting proof of the claim in Form F to the interim resolution professional or resolution professional.

Jaypee Infratech Ltd, which is currently undergoing the Corporate Insolvency Resolution Process, has, therefore, uploaded the new Form-F on its Website for facilitating the aggrieved home buyers to make claims for the undelivered flats.

Harini Daliparthy

Legal Associate