Delivery of stuck realty projects may be delayed further over procedural snags
Across the country, home buyers and financial institutions have been pinning their hopes on the dedicated bankruptcy court for resolution and a much-needed push to ensure delivery of over 100,000 such houses, most of which have been stuck for over a decade.
However, despite the Supreme Court appointing new boards or designated authorities to complete construction of pending projects, they are yet to see much progress due to disagreements amongst various stakeholders, such as government authorities and secured lenders. Appointment of resolution professionals and moratorium need to start from reference of application by financial creditors, experts said.
“Once the committee of creditors approves a plan, then NCLT may focus on compliance of IBC and rely on commercial wisdom of CoC,” said Rajiv Chandak, Partner, Deloitte India. “Delay in implementation of admission and resolution is leading to deterioration of assets in the company. Time taken in CIRP can be shortened dramatically and bring our code further in line with developed jurisdictions.”
Among the bigger cases, such as
‘s, there has been little progress in completion of projects as the scheme formulated by the new board is facing objections from authorities and secured lenders on grounds of unfair and arbitrary treatment to them under the plan.
In the matter, the court appointed developer NBCC in 2019 to complete the projects, but it could not achieve much in terms of construction for long owing to lack of funds.
case, the corporate insolvency resolution process has been on for four years and the resolution plan approved by committee of creditors under insolvency & bankruptcy code is pending for National Company Law Tribunal (NCLT) approval.
The delay in implementation of the plan also deters bidders who are interested in working on resolution.
“Average resolution timelines in NCLT have gone to nearly 600 days from the mandatory outer limit of 270 days. This changes the assumptions, costs, value of assets and liabilities and regulatory regime for projects, which makes resolution applicants wary of taking it forward.