I am a customer and am the KING. Really?

 

Businesses fail. No big deal. 

There’s a whole count of failures against every success story that we come across. And the manner in which startup ecosystem in India is fuelling the serial entrepreneurism, shutdowns are an undeniable fact. In fact, a study stated that 90% of startups in India fail within the first five years of inception. The key reason behind most is lack of compliance or legal controversies of the founders.

The question is: Are businesses using Insolvency as a means to bail out from a business post creating personal wealth? Is the system robust enough to make sure that such entrepreneurs don’t escape with ease?

And then there are the likes of Kingfisher – the king of the skies from 2005 to 2012 that crashed without a sight and without assuring anything to employees or to the banks who had trusted his vision.

Government introduced the Insolvency and Bankruptcy Code in may 2016. While the book definition is for us from the trade to fathom, in simple layman terms the code allows exit of corporate people, firms and organisation in a time bound manner and to maximise asset value and available credit line to balance interests of all stakeholders, which could include banks, employees as well as government dues.

If we specifically look at real estate to understand this, the ‘Code’ no where envisages the role of a Customer of a developer company as The Financier for the construction through the product lifecycle and the duration of the customer’s association with that developer. Hence a debate over financial creditor, operational creditor and other creditor(s), and the story of the claimant ‘Forms – to B’ or not to B’ but at the end F’.

Imagine? Assigning F’ for me the Customer – The KING.

The Code addresses the exit of a Corporate Debtor owing a Debt in respect of a Claim, the Claim for breach of contract giving rise to a right to payment.

So as a real estate Customer where do I get this so called ‘claim’ sorted? Why not under RERA, ensuring my protection.

RERA provides that I, the Customer or if I may fondly continue to call myself the KING, shall be entitled to Claim the refund of amount paid along with interest and compensation, from the Corporate Debtor, if he fails to give possession of the real estate. But who is listening?

So what if my construction linked payments to that Corporate Debtor, is providing ‘the cash cover’ for the security of the voting financial creditor under the code.

By the book, Jaypee Group is on a lease of 180 days to escape insolvency and bankruptcy code through an Insolvency Professional’s assessment of their debt, credit line and asset value. And then there are and will be others in the queue and this is some queue.

Should this be qualified as freedom to exit business?

The question is: Are businesses using Insolvency as a means to bail out from a business post creating personal wealth? Is the system robust enough to make sure that such entrepreneurs don’t escape with ease?

The current POTUS has had his corporations file for bankruptcy 4 times and yet there has been no dent to his billionaire status. Vijay Mallya hasn’t scaled down on his lifestyle and neither would the others who are in line for Insolvency.

It’s more like a charter towards economic freedom.
For whom, remains unanswered!

Under the current circumstance, it remains to be seen how long I can hold my fort and claim my Kinghood.

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