With massive Jaypee Infratech, Jaypee Aman losses staring them in face, here is what homebuyers should really know

By: | Published: September 6, 2017 5:15 PM

A majority of investors are still unaware of their rights as also how are they impacted in case their developer is declared insolvent.

Jaypee Infrastructure group, insolvent developers, developer declared insolvent in NCR, homebuyers unaware of their rights, Magicbricks Consumer Choice Poll Buyers are likely to benefit from insolvency of developers as work is in progress and handover of completed projects is being expedited.

A handful of developers in the National Capital Region have filed for insolvency. However, a majority of investors (about 90%) are still unaware of their rights as also how are they impacted in case their developer is declared insolvent. This has been revealed by a Magicbricks Consumer Choice Poll conducted recently.

Property site Magicbricks conducted the poll (sample size of 900) to get insights into buyer understanding of insolvent developers. In the light of the Jaypee Infrastructure group being run by an Insolvency Resolution Professional at the behest of IDBI Bank (presently stayed by the Supreme Court), E Jayashree Kurup, Head-Content and Advisory, suggests that “the effort with insolvency is to ensure that buyers get their homes and lenders get their money. Being the first such case in real estate, the status of different classes of creditors, including buyers, is being defined. Once this is done, buyers will benefit from insolvency as work is in progress and handover of completed projects is being expedited.”

In the case of developers such as Jaypee, whose borrowing is backed by assets whose net worth is far more than the borrowed amount, this problem can be resolved when the handing over process begins in a phased manner and consumer receivables start flowing in regularly.

“Insolvency is invoked by a lender when the company does not have enough liquidity to service the debt taken from lenders to execute the project. Today, consumers have the choice to understand the process and act. All Jaypee Infrastructure buyers should have filled their claims forms by August 24th. If buyers have not done so, they can still go to Jaypee Infrastructure website and fill Form F giving details of their flat number, the amount paid and the tripartite agreement with the builder and bank that has been executed,” says Jayashree.

In case of the Jaypee Aman project, under the leadership of the Insolvency professional Anuj Jain, the units were almost at completion stage and 25 units were handed over to users over the weekend. The last instalment of their payments fuels liquidity in the company which is used to give possession of 450 + units in Aman and 1 tower of Kosmos in the next 45 days, exceeding number of deliveries to 1150 units. Thus, consumers stand to gain by the insolvency route.

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