New Delhi: The number of insolvency cases filed against realty firms has more than doubled in the third quarter (Q3) of the current year as compared to the same period of the previous year. Only 209 cases were filed by homebuyers in Q3 of 2018 and the number reached 500 in Q3 of the current year, according to analysis by ANAROCK Property Consultants.
So far, 1,724 cases have been filed by homebuyers against real estate companies since July 2018.
“Over three years since the enactment of IBC and the formation of the Insolvency and Bankruptcy Board of India (IBBI), homebuyers have been empowered by this landmark regulation. Real estate and allied businesses account for close to 20% of the total of 2542 cases filed with the IBBI since its inception on 1st December 2016 till September 2019,” said Anuj Puri, Chairman, ANAROCK Property Consultants.
Interestingly, the number of cases closed under the IBC regime has trebled. Only 68 cases were closed in Q3 of 2018 while the number of cases closed in Q3 of 2019 jumped to 201.
But ANAROCK has pointed out to certain concerns regarding the way cases are being filed and being closed. There have been cases where even cash-positive real estate firms have been subjected to insolvency proceedings by a single homebuyer, it says. In some cases, completion of a project has been delayed because of insolvency proceedings stared by homebuyers, it further says.
The present IBC regime does not distinguish between project liability and the company itself and there could be instances where the company has not delayed any of its other projects, it further points out.