Union Minister Arun Jaitley on Friday said the latest ordinance on the Insolvency and Bankruptcy Code that has given homebuyers rights on par with financial creditors will further improve formalisation of the real estate sector and curb fly-by-night operators entry.
The ordinance has given homebuyers the power to initiate insolvency proceedings against errant developers. In an article, Jaitley said given the logistical problems, “liquidations are rarely likely to take place in asset-owning companies” and that resolution is the natural course. The ordinance was approved by the President on Wednesday.
In a resolution, probably some other developer would acquire interest or some alternative method would be found for completing the project. “The inevitable consequence of this would be that the market itself will discover solutions,” Jaitley said.
Just as the film industry in recent years, the real estate industry would eventually have to formalise itself where sound and structured developers would remain and ‘fly by night’ operators would be eliminated, he added. Similarly, projects would be completed in reasonable time and investors would get their share of allotments expeditiously.
(with inputs from FE)