Realty Insolvency Cases Show 62% Success Rate, Customized Code May Boost Resolution

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    In the realm of insolvency and bankruptcy cases within the real estate sector, a significant progress has been observed in terms of resolutions, despite the complexities involved, including the presence of numerous troubled homebuyers.

    Experts suggest that the government’s potential plan to introduce changes to the code, allowing resolutions based on the nature of the projects rather than enforcing a rigid framework for the entire property sector, is likely to further enhance performance.

    According to the latest data from the Insolvency Bankruptcy Board of India (IBBI), a total of 6,571 companies from various sectors were brought into administration until the end of March this year.

    Among these cases, approximately 21% or 1,380 companies belonged to the real estate sector. Encouragingly, since the implementation of the Insolvency & Bankruptcy Code (IBC) in 2016, around 62% of these real estate companies, amounting to 854 firms, have successfully resolved their insolvency issues.

    Jaxay Shah, former president of CREDAI, noted that the challenges faced in resolving insolvency cases in the real estate sector are distinct from those encountered in other sectors. This is due to the involvement of homebuyers as operational creditors. It is imperative to analyze the achieved numbers while considering these unique factors. Shah emphasized that a customized code tailored to the real estate sector would expedite the resolution process.

    This positive development in realty insolvency cases signifies a significant step forward, and if the government implements a customized code for the industry, it could potentially lead to even more favorable outcomes in the future.

    Also Read: Government Considers Allowing Flat Registrations Even if Developer Faces Insolvency

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