Apartment owners who are part of such insolvent projects should explore protection granted by the statute and try and compel the state development authority to recover the money from the developer and complete the project and keep its promise of providing housing to owners.
The NCLT has appointed insolvency professional Anuj Jain as CEO of Jaypee Infratech. As of now the board of directors of the company has been suspended. Jain will now sit with Jaypee’s creditors to see if a resolution of the company’s debt is possible. He will be given six months to revive the company. This period can be extendable by another three months.
Homebuyers will be given two weeks (until August 24) to raise claims related to their investment in the Jaypee projects. What this means is that homebuyers will have to give details of the amount they have paid the company on a prescribed form. This is a legal requirement that will record the total amount that may have to be paid back to the homebuyers in case all attempts to revive the company fail.
Any recovery proceedings against the company will now remain stayed or transferred to NCLT until the restructuring exercise is complete. All orders of compensation against the company will also be dealt by NCLT. Any claim in any other court will also be dealt by NCLT, say legal experts.
What happens if a developer is declared insolvent? Unsold inventory in the company’s name becomes the property of the liquidator. Inventory sold before the date of the order remains out of the liquidation process (a property bought by an individual before the date of the order will remain out of its ambit) but the larger issue here is that of completion of the project. Experts are asking if the sale agreements have been executed with 60 percent of buyers and the project is not complete, how will the remaining 40 percent of the project be executed?