Key points
- Allottees are financial creditors and must file claims in Form CA with the interim resolution professional, ideally within 14 days of the public announcement.
- Homebuyers vote through an authorised representative appointed under Section 21(6A), with the class voting by majority of those who vote.
- A resolution plan that provides possession of completed units is often better for allottees than a refund at liquidation value.
Filing the claim
The public announcement gives a deadline for claims, usually 14 days from the announcement, with claims accepted up to 90 days after the insolvency commencement date. File Form CA with the builder-buyer agreement, payment receipts, bank statements and any RERA order. Claims are admitted for the amount paid with interest as per the agreement, and disputes about admitted amounts go to the NCLT.
Voting
Homebuyers as a class are represented on the committee of creditors by an authorised representative, chosen from the three insolvency professionals named in the announcement. The AR votes as directed by more than 50% of the allottees who vote on each matter. Organising allottees into a group with a common adviser makes the difference between being heard and being outvoted by banks.
Refund or possession?
A resolution plan usually offers completion and possession, sometimes with revised timelines, rather than cash. Liquidation value for allottees is often small, so completion plans, including those where allottee associations take over the project under the reverse CIRP model approved by the NCLAT, tend to deliver more.
RERA and consumer forum proceedings
These are stayed by the moratorium under Section 14. Orders obtained before admission are treated as claims. The Supreme Court in Pioneer Urban v. Union of India (2019) upheld the treatment of allottees as financial creditors and confirmed that RERA and IBC remedies co-exist, with the IBC prevailing once CIRP begins.
Frequently asked questions
I missed the claim deadline. Can I still file?
Claims can be filed up to 90 days from commencement and the NCLT has condoned later filings where the plan has not been approved, but late claims are often admitted only at the resolution professional's discretion. File immediately.
Does the moratorium stop me from getting a refund order from RERA?
Yes. No new proceedings can be instituted or continued against the builder during CIRP; your remedy is through the claim process.
Can allottees themselves start insolvency against a builder?
Yes, but a Section 7 application must be filed jointly by at least 100 allottees or 10% of the allottees of the project, whichever is less.
Related practice area: Insolvency & Bankruptcy
This article is for general information and does not constitute legal advice. Laws, rules and limitation periods change and depend on the facts; please take advice on your own situation before acting. Reading this article does not create a lawyer-client relationship with Akhtars Legalitarian.