The trend of real estate majors going bankrupt and filing for insolvency proceedings has caught the attention of the Uttar Pradesh government.
UP chief minister Yogi Adityanath government has ordered for constituting a high level committee to review the situation and report on the underlying reasons for the big realtors in the state going bust, and leaving buyers and investors in a lurch.
According to officials, the government is concerned about the high possibility of the flat buyers losing their hard earned money in such failed projects.
Acknowledging the distress caused to investors and flat buyers due to the sudden bankruptcy and insolvency of builders, the government has decided to set up a high level committee to look into the issue in its entirety.
A number of prominent private real estate players are either already bankrupt or standing on the verge of insolvency.
In UP, the distressing trend started with leading real estate player Amrapali Group going bust. So far, more than a dozen big and midsized realtors have been proclaimed bankrupt. Big players like Unitech, Sahara and Jaypee have been declared insolvent.
Similarly, the National Company Law Tribunal (NCLT) has initiated insolvency proceedings against two big players viz. Supertech and Logix City Developers Private Limited.
Recently, Yogi had reviewed the real estate situation with top officials and expressed concern as to why the realtors were going bust despite the presence of a robust mechanism of the Real Estate Regulatory Authority (RERA).
RERA was implemented pan India in May 2017, yet the trend of builders filing for insolvency and the consequent hardships to the flat buyers prompted the CM to order for instituting a group to make a holistic assessment of the ground situation for taking remedial measures.
The idea is to strengthen the real estate sector in UP and also to curb arbitrariness on part of the builders for protecting the interests of buyers.
Last year, UP RERA had indicted prominent realtor Ansal API for allegedly siphoning off Rs 606 crore from its key housing projects in Lucknow.