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The Indian government is poised to instill confidence in the falling real estate market through their mandated legal compliance of the Insolvency & Bankruptcy Code (IBC). In a move to protect homebuyers, the government is cracking down on debt-ridden real estate corporations, the latest of which is the Jaypee Group.

The Jaypee Group is a conglomerate of businesses in various industries such as Engineering, Construction, Power, Real Estate, IT, Cement and many more. They are in charge of various multi-crore projects, including the Yamuna Expressway project.

In November of last year, IDBI bank filed a petition against Jaypee Infratech for insolvency of the corporation. As the adjudicatory body for corporate law, the National Company Law Tribunal (NCLT) admitted this claim - asking the real estate mogul to either clear their debts in full or find a process for resolution.

It has been over a year, and homebuyers are still in the wind as to if and when they will receive delivery of homes - or compensation for the same.

As per the new amendments to real estate company compliances of the IBC, home buyers are now legally considered as financial creditors. In fact, homeowners now have more than a 62% representation in the committee of creditors.

Here are some of the key steps being taken to resolve the Jaypee insolvency crisis.

1. Before the IBC amendment, home buyers petitioned against the IDBI Bank insolvency claim. They were vastly underrepresented and liquidation of assets would have gone majorly in the bank’s favor. The IBC amendment has now given home buyers legal claim to the assets from this dispute resolution.
2. The Supreme Court (SC) asked the Jaypee Group to pay estimated Rs 2,000 crores worth of damages.
3. Senior management of the company was barred from leaving the country.
4. Directors of Jaiprakash Associates Limited (JAL) - an offshoot of the Jaypee Group, were asked to present details of their assets in court, in person.
5. Last November, the real estate developer doled out Rs 275 cr.
6. An active web portal is collecting complaints against the developer from homebuyers, who easily number in the 30,000s.
7. Earlier this May, the SC decreed that JAL would have to deposit Rs 1,000 cr by June 15. This was later decreased to Rs 600 cr and passed on to the NCLT to ensure legal compliance by the developer and an expedited reimbursement process.
8. JAL is expected to pay back the amount to homebuyers in seven installments.

For more information on legal compliance of the IBC and other corporate laws, be sure to tune into the Lawyered blogs.