Homebuyers as financial creditors: what the IBC route does and doesn't get you
Allottees in a real-estate project are treated as financial creditors under the insolvency code. That gives them representation on the committee of creditors — and a threshold to cross before they can trigger the process at all.
The threshold
An application by allottees must be brought jointly by a minimum number of them from the same project, meeting the statutory floor. It is deliberately not a remedy a single disappointed buyer can invoke.
What insolvency gives you
- A moratorium that halts enforcement against the corporate debtor while resolution is attempted.
- A seat, through an authorised representative, in the committee that votes on a resolution plan.
- A structured process with a professional in control of the company.
What it costs you
The same moratorium can freeze the RERA proceedings you were relying on. Insolvency is a collective process aimed at reviving the company; it is not a fast route to one buyer's possession or refund.
Insolvency is the right tool when the promoter cannot pay. Where the promoter can pay but won't, RERA enforcement is usually the sharper instrument.
Weigh the two before filing. Choosing the collective route means accepting a collective outcome.
More reading
Contract labour on site: who answers as principal employer
Engaging workers through a contractor does not move the liability as far as most developers assume.
Section 7 by allottees: meeting the 100-or-10% threshold
The IBC door opened to homebuyers, then narrowed. Assembling the numbers is now the first and hardest part of the petition.
Joint development agreements: the clauses that decide who carries the risk
A JDA allocates land, money and blame. Most disputes trace back to four clauses that were drafted as boilerplate and read as an afterthought.