Home buyers finally got the status of Primary secured creditors

By Realty Quarter Bureau

The Union ministry of housing and urban poverty alleviation (MHUPA) has accepted the long-standing demand of consumer organizations that home buyers should be given the status of primary secured creditor (PSC) in case the developer goes bankrupt or financial institutions begin process of liquidating assets.

Currently, if a builder becomes bankrupt, home buyers have last rights on his assets. The laborers have the first right on the proceedings from sale of his assets, then come financial institutions. Home buyers, who invest money in the developer’s project, come last.

Speaking with Mirror, Mumbai Graham Panchyat’s executive president Shirish Deshpande said, “We had been pursuing the matter with the Central government for suitable amendment to Insolvency and Bankruptcy Code (IBC) for year now, and the MHUPA has now accepted our position and assured to write to the ministry of corporate affairs to initiate proceedings to make home buyers PSDs.”
Deshpande said that in most cases, the home buyers, who invest their life’s savings, rarely get anything back if something goes wrong with the project. “However, the new amendment to Insolvency and Bankruptcy Code will put home buyers on equal footings with financial institutions and give them a chance to recover at least a part of their investment,” he said.

Deshpande further said, “The Supreme Court has also taken a favourable stand on this issue to protect the interests of home buyers, and the Central government is also moving in the same direction.” It may be recalled that the Supreme Court in its September 11in the case of Jaypee Infratech, against whom financial institutions had initiated insolvency proceedings, directed the insolvency resolution professionals to take over the management of company and submit a resolution plan within 45 days t ..

Meanwhile in order to revive redevelopment projects of cessed buildings in the island city, which have been languishing for years, the state government is considering the option of amending development control rules (DCRs) and sell the other properties of developer and complete the project through sales proceedings of his properties.

Currently, nearly 1,292 redevelopment projects are at various stages of development affecting nearly 50,000 tenants. Around 700 such projects have so far completed rehabilitating nearly 20,000 tenants.

There are around 16,000 such cessed buildings in Mumbai, housing nearly two lakh tenants.