Homebuyers under the Insolvency and Bankruptcy Code: From Consumers to Financial Creditors

This article examines the transformation of homebuyers from mere consumers to financial creditors under the Insolvency and Bankruptcy Code, 2016. The 2018 amendment recognised amounts raised from real-estate allottees as “financial debt” under Section 5(8)(f), enabling homebuyers to initiate insolvency proceedings and participate in the Committee of Creditors. The article analyses this legal development through important judicial decisions, particularly Pioneer Urban Land and Infrastructure Ltd. v. Union of India and Chitra Sharma v. Union of India. It also considers the practical challenges faced by homebuyers, including delays, conflicting interests and effective participation in insolvency proceedings.