The status of homebuyers under Insolvency and Bankruptcy Code is in the nature of financial creditors. The IBC has been amended so as to change the status of homebuyers and their treatment in bankruptcy cases. The status of financial creditors has been accorded to the homebuyers , with the law being silent about the fact if they are secured or unsecured financial creditors.
This amendment has strengthened the position of homebuyers in cases of debt recovery. Prior to the amendment, homebuyers had no remedy available to them to recover money except to approach a Court of law, where their debt was at the bottom of the priority list. Now, they will be treated at par with the banks and financial institutions as financial creditors. Further, whether the homebuyer is a secured or unsecured creditor is left to be decided on a case-to-case basis.
The onus to prove the category in which the creditor is qualified lies on the homebuyer in accordance with the agreement signed with the real estate company. It is only the secured creditors who will get precedence in payment from the sale of assets when the company gets liquidated.