Govt eyes realty bankruptcy at tower level to ease misery

At present, insolvency resolution takes place only at the level of the corporate entity

- Gireesh Chandra Prasad

Narrowing bankruptcy resolution to a single project raises fresh policy questions, including how to treat a developer that has defaulted on repayments.

(ISTOCKPHOTO)

The government and the Insolvency and Bankruptcy Board of India (IBBI) are examining if the proposed framework tailored for real estate sector should attempt to resolve financial distress at the level of individual projects or at the level of individual towers within a project, according to two persons familiar with the discussions.

Identifying the exact scope of a proposed new regulatory regime for rescuing distressed assets in the housing sector is a key area of the consultations that the ministry of corporate affairs (MCA) and IBBI have started after the Supreme Court in September ordered coordinated action by all stakeholders to protect the interests of homebuyers and restore confidence in the real estate sector.

Narrowing bankruptcy resolution to a single project—or even a single tower within a project—raises fresh policy questions for the authorities, including how to treat a developer that has defaulted on repayments.