What is reverse insolvency in property: You must have often heard about builders going bankrupt. Whenever insolvency is imposed on a housing project, in simple terms the builder becomes bankrupt, the construction work stops and the buyers’ savings of years go into darkness. In such a situation, the hope of getting a flat is almost lost. The dreams of thousands of families are put on hold, EMIs continue, rent also has to be paid and no solution is visible. But the question is whether one can get the flat even after the bankruptcy of the builder or not?
What is reverse insolvency and how does it work?
Reverse insolvency is a process in which after declaring the project bankrupt, the builder is given the opportunity to complete the project. This is in sharp contrast to normal insolvency, where the builder is thrown out of the project and the responsibility for completion is handed over to an outside company. In reverse insolvency, the court allows the builder to revive the project with the consent of the buyers, financial institutions and all stakeholders, with close monitoring, transparent financial controls and strict timelines.
During this period, the Interim Resolution Professional (IRP) monitors the entire construction, expenditure and progress. This model has been created for those projects where the builder has the right intentions but the circumstances become unfavorable and the project gets stuck. The aim of this model is to get the buyers their homes by restarting the project, and not just to penalize the builder. The support of this model by the Supreme Court is its biggest strength.
Greater Noida’s first project where 1918 people will get homes
Under this model, RG Luxury Homes of Greater Noida West has become the first project in Gautam Buddha Nagar, where despite insolvency, all the buyers are going to get their house. RG Group said that towers G and H of RG Luxury Homes located in Sector 16B, which have a total of 464 flats, have received the occupancy certificate. Registration and possession of flats in these towers will start soon. Earlier, 854 units of Towers A, B, C and M and 600 flats of Towers D, E and F had also received occupancy certificates. In this way, the way has been cleared for a total of 1918 buyers of Phase 1.
When did you go bankrupt?
RG Luxury Homes is a project spread over eighteen point five acres and comprises thirteen residential towers. In September 2019, Phase 1 of this project was sent into insolvency process, affecting all 1918 units and buyers had almost lost hope. As per the procedure, an interim resolution professional was appointed. The work to revive the project started in July 2021. Expressing its commitment to complete the project, the promoter presented a detailed restoration plan with a clear roadmap of financial arrangements and timelines. Buyers, financial institutions, Greater Noida administration and the NCLT-appointed IRP all supported the proposal.
Work started again, now got OC
With the monitoring and support of all stakeholders, construction work resumed in October 2021 and the entire project was completed in just two years.
Himanshu Garg Director RG Group said that getting the occupancy certificate for the entire Phase 1 and giving houses to 1918 families seemed almost impossible at the time of insolvency. The support of buyers and all stakeholders gave them the strength to complete the project.
Manoj Kulshrestha IRP said that at a time when many real estate projects remain stuck in NCLT for years, the timely completion of RG Luxury Homes is a historic achievement. The promoter has completed the project without compromising on the construction quality even by selling private properties.
