Govt. may alter insolvency law
Context
The insolvency law might be amended depending on recommendations of the panel reviewing issues related to the legislation, including those pertaining to home buyers, a senior government official said.
What: Insolvency Law Committee
A 14-member panel, also chaired by Mr. Srinivas, is working to identify and suggest ways to address issues faced in the implementation of the IBC — which came into force in December 2016.
Skewed in favor of financial creditors
- There is a feeling that this law is skewed a little too much in favour of financial creditors
- It is not adequately addressing the requirements or expectations of other stakeholders
- According to him, competition, regulatory clearances, tax liabilities and other aspects would also be looked at.
Concerns
- “There are also apprehensions on whether this system [insolvency law] can be abused. Can somebody trigger this system for some sort of wrongful intent?”
- Among others, issues such as whether the insolvency process should be governed by liquidation value or enterprise value would also be looked into
- “What are the rights of home buyers? What is the capacity of insolvency professionals? These are among the issues that has to be seen,”
Homebuyers problems
- In recent months, there have been concerns about incomplete realty projects and consequent hardships faced by home buyers
- Some real estate firms are also facing insolvency proceedings.
- There have also been suggestions from certain quarters about having provisions that would help provide relief to home buyers.
