Six years of IBC - impact on Real Estate sector

Six years of IBC 2016 www.infralive.com 27 InfraLIVE January 15, 2023 n a ma j o r e c o n omi c I reform, the Parliament of India enacted The Insol- vency and Bankruptcy Code, 2016 (IBC) in May 2016 to provide for insolvency resolution of distressed entities in a time bound manner for maximisa- tion of value of assets of such entities and to balance the interests of all stakeholders. The IBC was enacted to ensure a cultural transformation in the existing i n s o l v en c y and bank r up t c y landscape. It established a new architecture for insolvency resolu- tion and liquidation of unviable entities. Strict timelines were introduced and a code for judicial restraint/ moratorium was built into the law at every step of the process. It also established Insol- vency and Bankruptcy Board of India (IBBI) in October 2016 as an independent regulator for the sector. The IBC came into opera- tion with effect from December 1, 2016. Earlier, the Parliament of India had also enacted Real Estate (Regulation and Development) Act 2016 in March 2016 for regulation and development of real estate sector and to protect the interests of the consumers/ homebuyers. The Act made the provision for establishment of one or more Real Es tate Regul atory Author i ty (RERA) in each state. The provi- sions of the RERA Act came into operation from May 1, 2017. Accordingly, RERAs have been constituted in each state except West Bengal. While Haryana has two RERAs, Delhi and UT of Chandigarhhas a commonRERA. The Parliament had provided time-bound disposals under both the Acts - sixty days for redressal of grievances/ complaints under RERA Act, and 180/270/330 days f or f rami ng the r e so l ut i on/ liquidationplans under IBC. These reforms have brought sea change in the real estate sector. As RERAs are sector specific regula- t o r s , t e n s o f t h o u s a n d s o f homebuyers have thronged the offices of RERAs in various states across the country in last five and half years for resolutions of their grievances and have got orders in many cases in their favour. There has however been inordinate delay i n execut i on/ enf or cement / implementation of these orders in several states due to various factors. Since the real-estate sector was largely unregulated until mid- 2016 i n many s t a t e s , many aggrieved homebuyers have also approached National Company Law Tr i buna l s (NCLTs ) f o r institution of insolvency proceed- ings under IBC. Many financial creditors particularly banks, operational creditors etc have also moved NCLTs for commencement of Corporate Insolvency Resolution Process (CIRP) of real estate developers/ companies since 2017 forcing thousands of home buyers to implead themselves as the fate of their projects/ apartments lay in Six years of IBC 2016 r Impact on Real Estate Sector r Homebuyers face indefinite waitings and uncertain outcomes A RTICLE BY RB S INHA , FORMER DG OF CAG