NEW DELHI: President Ram Nath Kovind has given his nod to promulgate an ordinance amending the insolvency law, recognising homebuyers as financial creditors to real estate developers and providing for a special dispensation for small sector enterprises.Under the Insolvency and Bankruptcy Code Amendment Ordinance, 2018, homebuyers will get due representation in the committee of creditors (CoC) that takes a call on resolution proposals, making them an integral part of the decision making process, the government said in a press statement on Wednesday.However, the amended Insolvency and Bankruptcy Code ( IBC ) does not specify if homebuyers will be treated as secured or unsecured creditors. “The homebuyer will have to prove which category of creditor he is qualified to be as per the agreement with the real estate company,” corporate affairs secretary Injeti Srinivas said.Insolvency and Bankruptcy Board of India will frame the detailed mechanism of representation of the homebuyers on the committee of creditors.The amended code also provides some reliefs for micro, small and medium enterprises (MSMEs). It does not disqualify promoter of an MSME firm from bidding for his enterprise undergoing corporate insolvency resolution process (CIRP), provided he is not a wilful defaulter and does not attract other disqualifications not related to default.“An ordinance to amend Insolvency and Bankruptcy Code promulgated today; this will help in faster turnaround of MSME sector during insolvency, protect interests of home buyers and streamline various provisions to improve recovery from NPAs,” interim finance minister Piyush Goyal tweeted.The new code allows withdrawal of a resolution application with the approval of 90% members of the committee of creditors. However, such withdrawal will only be permissible before publication of notice inviting Expressions of Interest (EoI). This means there can be no withdrawal once the commercial process of EoIs and bids starts.The voting threshold for all major decisions has been brought down to 66% from earlier level of 75% to encourage resolution as against liquidation. To facilitate corporate debtors to continue as a going concern during the CIRP, the voting threshold for routine decisions has been reduced to 51%.Section 29(A) of the IBC, 2016 has also been fine-tuned to exempt pure-play financial entities from being disqualified on account of NPA. A resolution application holding an NPA by virtue of acquiring it in the past under the IBC, 2016, has been provided with a three-year cooling-off period, from the date of such acquisition.“Unintended exclusions should be avoided and there should be adequate competition for the stressed assets. This is our intention,” Srinivas said.Changes to IBC have been made on the basis of recommendations made by a 14-member committee headed by the corporate affairs secretary. The amendments also lay down mandatory timelines, processes and procedures for insolvency resolution process.Some of the specific issues addressed include non-entertainment of late bids, no negotiation with the late bidders, and a well laid down procedure for maximising value of assets. Other changes brought about by the ordinance include non-applicability of moratorium period to enforcement of guarantee.