IBC delivers superior value to creditors in real estate

According to a joint report by property consultants ANAROCK and leading law firm, Khaitan & Co, Insolvency & Bankruptcy Code (IBC) has resulted in settlement of 66% of the admitted claims in real estate sector in comparison to just 31% of admitted claims realised in other sectors. Real estate consumers have very important avenue for relief in the form of IBC through which real estate cases are admitted in National Company Law Tribunal (NCLT). An important milestone in the evolution of IBC has been the amendment that gives homebuyers the status of financial creditors. Hence, the homebuyers are considered at par with banks and other institutional creditors — when it comes to recovering dues from those builders who have gone bankrupt.

According to Shobhit Agarwal, MD & CEO, ANAROCK Capital, IBC code has been helping the lenders in securing their dues in a much quicker timespan, it has delivered superior value realisation to the stakeholders of real estate sector compared to other industries. Successfully resolving insolvencies and driving value realisation through this code requires adequate planning and a structured approach. He added that real estate has the highest proportion of ongoing cases under Corporate Insolvency Resolution Process (CIRP),

Aashiesh Agarwaal, SVP – Research & Investment Advisory, ANAROCK Capital,  observed that the report examines the progress made on marquee cases involving real estate developers, including Unitech Ltd., Ariisto Developers, Supertech, Jaypee Infratech, Radius Estates, Lavasa Corp, Amrapali Group and DS Kulkarni. According to Sudip Mullick, Partner, Khaitan & Co, it is very challenging for the resolution professional to run the business of insolvent real estate companies given the complexities involved in the real estate sector. He said, “In this report, we discuss the best way forward for the efficient resolution of real estate projects which safeguards the rights of homebuyers and other stakeholders.”

According to Kumar Saurabh Singh, Partner, Khaitan & Co, the recent amendments in the CIRP Regulations that allow the sale of assets in the CIRP of corporate debtors have been provided in the report.  He added that the stakeholders including the financial creditors as well as home buyers need to work in a coordinated manner to bring the best outcome in the resolution process. The report also takes a close look at the interplay between IBC and the real estate sector like key legislative developments within IBC impacting the sector, besides landmark judgments and the resolution track record in real estate and the time taken in various cases to resolve real estate insolvencies.

 

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