Real estate developers on Tuesday demanded protection from insolvency proceedings for at least a year as the sector had been severely hit financially due to the pandemic.
They also wrote to the Centre and the Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) seeking more time to repay loans.
“Section 7 of Indian Bankruptcy Code (IBC) allows a financial creditor to file for initiating the corporate insolvency resolution process against a corporate debtor. Section 9 provides for application of insolvency by an operational creditor, while Section 10 is for initiation of insolvency proceedings by a corporate applicant. We have requested that applicability of these three sections be suspended for a year like it was done in 2020 in view of Covid-19 pandemic,” said RK Arora, Uttar Pradesh president of National Real Estate Development Council.
Last year’s relief expired on March 31, 2021.
“We request from UP RERA and the government of India to extend this relief further because the second wave of Covid -9 has further ruined the business with most of our sales staff, construction works and others falling ill and affecting projects. Besides we request for a moratorium of one year for business loans in view of Covid 19 pandemic,” said Arora.
There are at least 600 ongoing realty projects in Gautam Budh Nagar district that consists of Noida, Greater Noida and Yamuna Expressway areas. As per the Confederation of Real Estate Developers Association of India (Credai), around ₹50,000 crore investment is at stake in these projects.
“The real estate sector saw worst phase in terms of sales and construction in 2020, when first Covid 19 wave arrived halting work at realty projects. As the sentiment began to revive in the market, the second wave struck and further deteriorated the sector and forcing a liquidity crisis,” said Prashant Kumar Tiwari, president of Western UP Credai.
The UPRERA will look into all these issues in its meeting next week.
“We are going to consider their (developer’s) proposal next week in authority meeting and take appropriate action in this regard,” said Balvinder Kumar, UP-Rera member.