In a first, the National Company Law Appellate Tribunal (NCLAT) has passed an order for reverse insolvency process that could set a template for stressed real estate projects.
The process will give a chance to the promoter to complete the project within a specified time frame. The resolution plan would then achieve the same objective of the insolvency process but not involve any third party approval or a resolution applicant to submit a bid.
The NCLAT has also said that if insolvency is initiated against a project, it will not extend to the entire company or any of its other projects.
The NCLAT order has come in the matter of a real estate company — Flatbuyers Association of Winter Hills-77, Gurugram, a project of Umang Realtech — to discourage the use of insolvency and bankruptcy code (IBC) as a recovery tool.