Will the government accept a key recommendation of the Insolvency and Bankruptcy Code (IBC) review committee? It suggests that homebuyers and financial creditors be given equal status. It means if a company defaults and its assets are sold, the homebuyer and the financial creditor will have equal claim. The pressure is mounting from agitated homebuyers with whom the courts are inclined to be sympathetic, but the move will be a big climbdown from what began as a dispassionate commercial law.
Moreover, the law has already been tinkered with, diluting many of its powers when the government banned all promoters from bidding for their companies in the resolution process. Frequent meddling by the government, RBI and other courts have already diluted the discretionary power that financial creditors had throughout the process. The government is yet to announce its final decision, but given the way things have moved so far, it is quite likely that a few more 'populist' provisions may have to be accommodated in the IBC.
Dipak Mondal