Across the country, homebuyers and financial institutions are pinning their hopes on the bankruptcy court for a much-needed resolution and boost to secure the delivery of more than 100,000 of these homes, most of which have been stranded for more than a decade. ‘a decade.
However, although the Supreme Court has appointed new boards or designated authorities to complete the construction of the pending projects, they have yet to see much progress due to disagreements between various stakeholders, such as government authorities and local authorities. secured lenders.
The appointment of resolution professionals and the moratorium must begin with reference to the request of financial creditors, experts said.
âOnce the creditors committee approves a plan, then NCLT can focus on IBC compliance and build on the business wisdom of the CoC,â said Rajiv Chandak, partner, Deloitte India. âThe delay in the implementation of admission and resolution leads to a deterioration of the company’s assets. The time spent on CIRP can be drastically shortened and our code more aligned with developed jurisdictions. ”
Among the most important cases, such as
‘s, there has been little progress in the completion of projects as the plan formulated by the new board of directors faces objections from authorities and secured lenders for reasons of unfair and arbitrary treatment of them in the framework of the plan.
matter, the court appointed a developer in 2019 to complete the projects, but it couldn’t do much in terms of construction for a long time due to lack of funds.
In this case, the corporate insolvency resolution process (CIRP) has been underway for four years and the resolution plan approved by the Creditors Committee (CoC) under the Insolvency and Bankruptcy Code ( IBC) is awaiting approval by the National Company Law Tribunal (NCLT).
The delay in implementing the plan also deters bidders who are interested in working on the resolution.
âAverage resolution times in NCLT have dropped to almost 600 days compared to the mandatory outer limit of 270 days. This changes the assumptions, costs, asset and liability values, and regulatory regime of projects, making resolution seekers reluctant to move it forward. The 270-day limit for closing the CIRP process should be sacrosanct for real estate projects, âsaid Amit Goenka, CEO of Nisus Finance.
According to him, time-limited authorizations including RERA, the planning and approval authority must be ensured to allow the immediate start of projects after resolution. Projects may be offered discounts on bonuses, development fees, ISF costs, and approvals, with the option of offering state government participation in lieu of these discounts.
Two years ago, the Supreme Court removed the leadership led by former developer Chandras in Unitech and appointed an independent board of directors. However, for the past two years, the council has not been able to carry out any activity regarding the completion of the houses pending approval of the project by the higher court.
This has left homebuyers helpless and unsure of where to go now.
âIn the past 18 months, following the appointment of a new Unitech board, our Alder Grove project, which was 6 months away from delivery, has seen no construction activity. The agony of 108 months late has become 126 months now. Homebuyers and taxpayers must suffer without any relief from interest charges, âsaid Aditya Mishra, a finance professional awaiting delivery of a home he bought as part of a Unitech project. . “What justice is being done by making homebuyers bear the full economic cost of this delay without any specific timeline for delivery of the houses.”
In cases like Amrapali, where raising funds for project completion has proven to be a challenge for the NBCC, partial resolution and partial liquidation can help.
âNot only in real estate, but in all industries, businesses have viable and unsustainable operations. Resolution may be provided for viable businesses and liquidation of non-viable businesses and redeployment of assets may be permitted. If you can sell the business partly under the CIRP, it should also help raise cash to support project completion, âsaid Chandak of Deloitte India.
Homebuyers had bought the homes of these unfinished projects 8-10 years ago and there is still no visibility to take possession of their homes.
In the case of Unitech, it is understood that the majority of projects have a significant cash surplus to meet the needs of not only homebuyers in those projects, but all of its stakeholders as well. And the problem of the few projects facing a shortfall can be solved by selling the company’s unencumbered assets without disrupting the rights of different stakeholders.
Experts said that resolution of these cases can only take place when the concerns of each project are addressed separately, including the identification of interested developers and investors who can take responsibility and also bring expertise and funds. necessary to complete the project on time and to balance the creditors’ interests of each project.
This way, if the viable projects are auctioned off to interested developers for an upfront consideration, it will not only solve the viable projects, but also generate funds for the companies to solve a few non-viable projects. Ends