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Noida authority as operational creditor: SC Verdict

Of late, it has been noticed multiple times that a lot of homebuyers are facing the problems related to insolvency proceedings of the real estate companies. In order to keep the homebuyers away from the grunt of insolvency proceedings, the Supreme Court has come to a conclusion that is likely to give relief to a lot of homebuyers and will make them more confident while buying or investing in properties.

For the uninitiated ones, let us explain the verdict in detail. Before that, it is important to understand the difference between operational creditor and financial creditor. Financial creditors can become the part of the committees of directors and can have the right to place its perspective in the insolvency proceedings. Moreover, they also have an opportunity to persuade the other members of the committee of creditors to either accept or reject or even to modify a resolution plan. The operational creditor doesn’t enjoy all of these luxuries. Since in Noida, this problem of abrupt insolvency has been noted by multiple investors, the Supreme Court has come in defence of the homebuyers and have made it a rule that for the time being, Noida authority will be treated only as an operational creditor.

It is quite obvious to assume that multiple operational creditors are not happy with the decision and would further go on to the Apex Court. Let us understand why : when an appellant is an operational creditor, his reliability and accountability decreases manifold. Also, it becomes difficult for them to have any say in the decision making process under IBC regulations.

However, one cannot deny the fact that it does enjoy certain advantages. For instance, if there is lesser accountability on account of the operational creditor, he would be able to save himself from the tedious process of getting multiple certifications and approvals. Financial creditor cannot bend the rules according to his or her will always be under acute scrutiny. He, though, has more power and credentials.

All said and done, as investors and home buyers, It is a matter of absolute relief for you that the Supreme Court values your money you put into the real estate companies and wants to ensure that your money doesn’t get wasted in insolvency proceedings. It is yet to be seen if Noida authority is going to further question the decision taken by Supreme Court, but as a matter stands now, it is an operational creditor and hence is less liable to have a way in insolvency proceedings

If you’re looking forward to buy a property in Noida and are confused about the procedure or anything related to the same, you can reach out to Geetanjali Homestates Private Limited to get a clearer perspective on all the property related matters in one go. Geetanjali Homestates Private Limited is a renowned company with its head office in Gurgaon and is also operational in Noida as well. Get in touch with the experts of the real estate industry and get well advised NOW.