Heavy Blow To Homebuyers: Threshold Limit Raised To 1 Cr For Initiating Insolvency Against Any Company Under IBC
New Delhi: In what could deal a heavy blow to the homebuyers rights under the IBC, the government today increased the threshold limit of triggering insolvency against a company to Rs 1 crore from Rs 1 lakh so far.
Finance Minister Nirmala Sitharaman said that raising the limit to Rs 1 crore would prevent insolvency proceedings against small and medium enterprises (SMEs).
Although the new limit may save a lot of SMEs, there would be very few homebuyers who can now file cases to start insolvency proceedings against a defaulting real estate company under the provisions of the IBC.
“The home buyers are already out into deep trouble by the illogical amendment to the IBC Act. Adding fuel is the announcement today which will keep the IBC code out of the reach of lower, middle and higher middle class home buyers. This is againt the interest of the homebuyers,” M S Shankar, National Secretary, Forum for People’s Collective Efforts (FPCE) told RealtynInfra.com.
Homebuyers have been loggerheads with the government in recent times over the provisions of the IBC under which they have been taking errant builders to task for some time now. Homebuyers were given the status of ‘financial creditors’ in the middle of 2018 under the provisions of the IBC and hence they could start corporate insolvency resolution process (CIRP) against the builder if they had paid Rs 1 lakh or more to the builder and the builder had not delivered on his promise.
However, there were changes made by the government in the provision of the IBC in regards to home buyers towards the end of 2019. Government brought in an ordinance to mandate that a minimum number of home buyers of a certain project would be required to come together to file CIRP against the builder.
The homebuyers, under the aegis of FPCE has written to the government including Prime Minister Narendra Modi to take back the ordinance.
They have even met Jayant Sinha who is heading the Parliamentary Standing Committee on Finance so as to present their views and oppose the ordinance.