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Home buyers eVoting under IBC

Lot of real estate project in India have gone bankrupt in the last decade and hence went into insolvency. These projects are spread across the country specially more so in National Capital Region (NCR). With the bankruptcy of such projects, the home buyers in such project are badly impacted. The home buyers generally invest their life time of saving and top it up with additional loan to buy a house. The loan amount is generally in crores and loan term as long as 15 to 30 years. If a housing project goes bankrupt, the home buyer does not get the home to live in and he is burdened to pay the housing loan principal and interest to the bank. It is a double whammy for him. To protect the interest of such home buyers IBC and IBBI came into being.

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IBC and IBBI

Under the Insolvency and Bankruptcy Code (IBC), 2016 rules regarding the insolvency process for such companies are provided. The Insolvency and Bankruptcy Board of India (IBBI) has been established under the Insolvency and Bankruptcy Code, 2016 for implementation of the Code that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner. The aim and objective of IBBI is to maximize the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. Here the stakeholder includes home buyers who are creditors to the company and also referred to as creditors in a class.

Need for voting

To run the insolvency process of such bankrupt real estate company an Insolvency Resolution Professional (IRP) is appointed by the court and the creditors. The IRP is expected to take charge of the company, run it in the best possible manner possible, complete the construction of the real estate project, work out the pending claims of each stakeholders including the home buyers and work out the best possible resolution for each stakeholder.

In such cases each class of stakeholders might have different interests and needs. As number of home buyers are large it is not possible to have all the home buyers in the Committee of Creditors (CoC) meeting and it is best to have an Authorised Representative (AR) representing them in the CoC meeting.

The AR represents the home buyers in the CoC meeting. To be able to represent home buyers in the CoC meeting, the AR need to know the opinion of home buyers on all matters and resolutions. As number of home buyers are large, face to face meeting and opinion gathering is difficult, inefficient and unscientific. Hence eVoting is conducted among the home buyers on all resolutions and based on the voting results of home buyers voting, the AR votes on their behalf in the CoC meeting.

Types of evoting under IBC

Generally, eVoting under IBC is required for following kinds of voting:

eVoting for Committee of Creditors (CoC) voting

eVoting for Creditors in a class

eVoting for Stakeholder Consultation Committee (SCC) voting

Generally, eVoting under IBC is required for following kinds of voting:

Homebuyers in a class

Unsecured creditors in a class

Operational creditors in a class

Debenture holders in a class

Rules of eVoting under IBC for creditors in a class has similar rules. The most common type of creditors in a class voting is home buyers voting. Here, we will detail out eVoting under IBC for homebuyers in a class.

WHY RIGHT2VOTE

Features recommended for eVoting of home buyers under IBC

Audit Trail

With AUDIT TRAIL feature, the system records IP address and time of voting of each and every voter. This helps in maintaining an audit trail and is useful in case of any dispute.

Voter Recipt

Each voter is sent a VOTER RECEIPT on his email. The receipt mentions the choice selected by the voter. This is very helpful feature for creditors or bankers who need the record of their eVoting for internal filing.

Allow vote change

ALLOW VOTE CHANGE feature allows the voter to change his vote any time before the close of voting. This feature is an additional feature for the member of creditor’s committee to use in case they receive instructions from their seniors / bank management to change the vote preference.

Weighted votes

WEIGHTED VOTES is a very useful feature for eVoting under IBC for committee of creditors. Unlike normal voting where each voter has one vote, in committee of creditor’s voting, the vote share is determined on the basis of outstanding amount of each creditor. With this feature, the result is automatically calculated after taking into account the respective vote share of each creditor. This saves lot of time and effort for the insolvency professional.

OTP based authentication

OTP BASED AUTHENTICATION feature ensures that only the authorised voter is able to vote. In case of committee of creditors there are multiple bank representatives who are involved in the process. Several members from the same bank might attend the meeting. However, OTP based authentication ensures that only the authorised voter is able to vote and nobody else is able to access or vote.

Time extension

TIME EXTENSION feature is very useful in case of creditors’ voting under IBC. For various reason including delay in approval from bank management or court instructions at times the voting duration has to be extended. Right2Vote offers free time extension feature where insolvency professional can extent the time of the poll multiple times free of charge.

Reminders

REMINDERS features allow the insolvency professional to send automated reminders to member of CoC who have not yet exercised their right to vote. The reminder only goes to voters who have not voted yet. Insolvency professional can send up to three reminders free of cost in Right2Vote online voting platform.

Detailed results in PDF and excel format

Right2Vote provide the result of the eVoting in both PDF and excel format. The PDF format gives the synopsis of the result with Right2Vote watermark. The PDF format is useful for circulation among creditors and for submission to court / NCLT. Right2Vote also provides result in excel format where audit trail details like IP address and time of voting is also available. This is to be used for audit purpose. As eVoting under IBC does not require SECRET BALLOT feature, the details excel result also provides individual voter vote preference.

Benefits of using Right2Vote eVoting platform for home buyer voting

Tested, certified and approved by Government of India

Right2Vote’s eVoting software is tested and certified by Standardization, Testing and Quality Certification (STQC) Directorate under Ministry of Electronics and Information Technology (MeitY), Government of India. Right2Vote is also an approved eVoting agency of Ministry of Corporate Affairs (MCA), Government of India.

As eVoting results need to be presented in the court / NCLT, it is always better to use a government of India certified platform.

Right2Vote’s 247365 DIY platform & responsive support team

Right2Vote’s eVoting platform is very easy to use and intuitive DO IT YOURSELF (DIY) platform. Insolvency professionals and their team can set up polls in the platform at any time of the day and setting up the poll does not take more than 15 minutes. Right2Vote support team is also very responsive and set up polls for the clients on short notice. Many a times during emergency, clients ask Right2Vote’s team to set up poll on 5-minute notice and Right2Vote team executes it without any delay. No other eVoting platform in India or abroad can match the responsiveness of Right2Vote’s support team.

Cost Effective

Right2Vote is the most cost-effective platform for eVoting under IBC. Right2Vote charges only Rs. 5000 + GST for Committee of Creditor’s eVoting for up to 200 creditors. Right2Vote also does not charge extra for long duration or for time extension in case of CoC eVoting.

Time and effort saving

Conducting Committee of Creditor’s eVoting using Right2Vote’s online voting technology saves lot of time and effort for the insolvency professionals. From setting up the poll, to sending invite, sending reminders, creditor authentication, vote recording, calculating results – everything is done by the system automatically saving lot of time and effort for IRPs. This enables busy IRPs to focus their energies and resources on other important and urgent matters.

Convenience for creditors leading to better participation

Creditors are busy people and it is not possible for them to attend all meeting of CoC or physically visit the IRP office for voting on all matters. Online voting enables committee members to vote anytime from anywhere. This not only saves time and effort of the creditors but also lead to better participation and higher voter turnout in voting.

Security and transparency

Right2Vote’s eVoting platform is not only secured with encryption, OTP based authentication and other features but is also very transparent with features like audit trail, voter receipt and vote record.

Feature rich

Right2Vote provides many other optional features like Team election, voter selfie, double authentication, biometric authentication and multiple votes - limited. Based on specific required of the poll, insolvency professionals can use these additional features. Unlike most other platform Right2Vote offers flexibility to use advanced features in critical and more sensitive polls like selection of Insolvency professional or approval of resolution plan.

Trusted by leading insolvency firms

eLeading insolvency firms and insolvency professional including AAA Insolvency, Sumedha Management, PwC, KPMG, Deloitte, Alvarez and Mashal are using eVoting, Video Conference, Virtual Data Room and eAuction services of Right2Vote for insolvency matters.

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FAQS

Frequently Asked Questions

What is insolvency voting under the Insolvency and Bankruptcy Code (IBC)?

Insolvency voting is the process through which financial creditors vote on important decisions during the Corporate Insolvency Resolution Process (CIRP). Voting is conducted by the Committee of Creditors (CoC), either during meetings or through electronic voting (eVoting), as prescribed under the IBC and related regulations.

How is voting share calculated in IBC proceedings?

Voting share is determined based on the proportion of a financial creditor's admitted debt compared to the total admitted financial debt of all financial creditors forming the Committee of Creditors. Every vote carries weight according to this percentage.

What is Section 5(24) of the Insolvency and Bankruptcy Code?

Section 5(24) of the IBC defines the term "related party" in relation to a corporate debtor. This definition is important because related party financial creditors may face restrictions regarding participation and voting in the Committee of Creditors.

What is liquidation voting under the IBC?

Liquidation voting refers to voting conducted during the liquidation process where creditors may be required to approve specific matters as provided under the Insolvency and Bankruptcy Code and the Liquidation Process Regulations.

Why is electronic voting preferred for IBC and liquidation proceedings?

Electronic voting offers transparency, auditability, security, faster decision-making, remote participation, automatic vote calculation based on voting share, detailed reports, and complete compliance with applicable legal requirements.

What is Section 110 of the Companies Act, 2013?

Section 110 of the Companies Act, 2013 deals with passing certain resolutions through postal ballot instead of holding a physical general meeting. Electronic voting can be used alongside postal ballot wherever permitted under the applicable rules.

What is Section 111 of the Insolvency and Bankruptcy Code?

Section 111 of the Insolvency and Bankruptcy Code relates to appeals concerning insolvency matters involving personal guarantors and individuals before the appropriate appellate authority. It does not directly govern voting procedures under the Corporate Insolvency Resolution Process.

What are creditor rights during insolvency proceedings?

Creditors have various rights depending on their category, including filing claims, receiving information, participating in meetings where applicable, voting through the Committee of Creditors (for eligible financial creditors), challenging decisions before appropriate forums, and receiving distributions according to the provisions of the IBC.

What security features should an IBC eVoting platform provide?

An ideal IBC eVoting platform should include secure login authentication, encrypted voting, role-based access control, audit trails, timestamped vote recording, weighted vote calculation, confidential ballots where applicable, downloadable reports, and compliance with applicable regulations.

Why should Insolvency Professionals use Right2Vote for IBC voting?

Right2Vote offers a secure, transparent, and legally compliant eVoting platform designed specifically for insolvency proceedings. It enables weighted voting based on admitted claims, remote participation, instant result generation, comprehensive audit reports, secure data handling, and an efficient experience for Resolution Professionals, Liquidators, and Committee of Creditors members.