"On the group insolvency laws , IBBI (Insolvency and Bankruptcy Board of India) had set up a group under U.K. Sinha and it has given the recommendations and it is difficult to say when are we going to take a call on that because that requires amendment in law also, so difficult to give a timeline but that also is an item under consideration," Sahoo told in an interview.
Current framework of IBC does not have any provision for group insolvency. It means there is no legal framework to facilitate insolvency resolution and liquidation of corporate debtors across a group. Group insolvency will attempt to club multiple entities of a group facing insolvency at a single court for resolution.
On the issue of an end to the long drawn resolution of Jaypee Infratech, Sahoo said the Supreme Court here has ended all uncertainties. "On Jaypee Infratech, Supreme Court has given a very clear direction that within 45 days, resolution plans of NBCC and Surakshya Realty have to be considered and another 45 days available for NCLT to give the approval and that it has done by using Article 142 of the Constitution. And I think that brings an end to all uncertainties," Sahoo added.
On the upcoming legislative changes that IBC may take up, the regulator chairman said, "The recommendations of the insolvency Law committee are being considered by the government. What government will accept that I will not be able to say that. Ministry of Corporate Affairs is looking into setting a minimum threshold of allottees for homebuyers to be able to initiate insolvency proceedings against real estate developers. Currently homebuyers are classified as financial creditors, which means that even a single homebuyer may be able to initiate insolvency proceedings against a real estate developer."
Corporate Affairs Secretary Injeti Srinivas had earlier said that the ministry had received representations that there were a number of cases in the western and northern region "of some otherwise fairly well functioning real estate companies have been pulled to insolvency proceedings by single homebuyers who want to claims refund."
In response to this development, the regulator said "I have no views on that. Initially homebuyers were not financial creditors. A need came up and government decided to make them financial creditors and in fact it was only by way of an explanation. If there are difficulties in implementing that, the government is also willing to address those. So there is no rigidity here."
To a question if the IBC law will be applicable to systematically important NBFCs and deposit taking NBFCs, he said "It is the consultation of government with the concerned financial sector regulator."
On November 6, the top court gave a 90-day deadline to complete Jaypee Infratech's resolution process. The court barred parent Jaypee Associates Ltd from bidding for the Noida-based real estate developer while directing that only NBCC (India) Ltd and Suraksha Realty Ltd can bid for Jaypee Infratech.
The UK Sinha-led Working Group on Group Insolvency has called for setting up a legal framework to facilitate insolvency resolution and liquidation of companies belonging to a group. The framework which may be enabling, and may be voluntarily used by relevant stakeholders of the company, the Working Group recommended. The report will be considered at the upcoming meeting of the Insolvency Law Committee, said sources.
( With inputs from IANS )