Q: Discuss about the citation of Flat Buyers Association Vs.Umang Realtech Pvt. Ltd through IRP & Ors ?

Ans: In the case of Flat Buyers Association Vs.Umang Realtech Pvt. Ltd through IRP & Ors, the following observations and judgements were held by the NCLAT-  1) The concept of Reverse CIRP was introduced in this case in which the Promoter will remain outside the CIRP but will play the role of a Lender (Financial Creditor) to ensure that the CIRP reaches success and the allottees take possession of their flats/apartments during the CIRP without any third party(Resolution applicants) intervention. 2) CIRP against a real estate company (Corporate Debtor) is limited to a project as per approved plan by the Competent Authority and not other projects which are separate at other places for which separate plans are approved. 

FOR EXAMPLE- If the same real estate company (Corporate Debtor herein) has any other project in another town such as Delhi or Kerala or Mumbai, they cannot be clubbed together nor the asset of the Corporate Debtor (Company) for such other projects can be maximised. 3)  ‘Secured Creditor’ such as ‘financial institutions/ banks, cannot be provided with the asset (flat/apartment) by preference over the allottees (Unsecured Financial Creditors) for whom the project has been approved. Their claims are to be satisfied by providing the flat/apartment. While satisfying the allottees, one or other allottee may agree to opt for another flat/apartment or one tower or other tower if not allotted to any other.  4) The allottees cannot demand a refund of the money. However, after offering allotment, it is open to an allottee to request the Interim Resolution Professional/Promoter, whoever is in charge, to find out the third party to purchase said flat/apartment and get the money back. After completion of the flats/project or during the completion of the project, it is also open to an allottee to reach an agreement with the Promoter (not Corporate Debtor) for refund of amount. 5)  Even during the Corporate Insolvency Resolution Process, the Interim Resolution Professional can also sell the unsold flats/apartments, by way of a Tripartite Agreement between the Purchaser, Interim Resolution Professional/ Resolution Professional and Promoter (Uppal Housing Pvt. Ltd.). The proceeds as may be generated from such sale should be utilized for completion of the project and payment to Financial Institutions/Banks and Operational Creditors.
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