The Union Cabinet has approved an ordinance to amend the Insolvency and Bankruptcy Code (IBC).
- Once the ordinance gets the President’s approval and the proposed changes will be incorporated in the Insolvency and Bankruptcy Code, 2016.
- The amendment will pave way for home buyers to be treated at par with banks and institutional creditors.
- It would provide a right to the homebuyers to initiate a resolution process against the bankrupt real estate companies and get their money back.
- The changes were made to ensure that the wilful defaulters and those whose accounts had been classified as non-performing assets for more than a year, were barred from bidding for stressed assets.
- The amendment was made based on the suggestions of a 14-member committee appointed by the government
- The Insolvency Law Committee had recommended to the Ministry of Corporate Affairs last month, that home buyers should be treated as financial creditors, which will allow them to equitably participate in an insolvency resolution process.
- The Cabinet panel has also suggested relaxations for micro, small and medium enterprises (MSMEs) under the IBC.
