Real estate firm Supertech went into insolvency after the National Company Law Tribunal (NCLT) declared it bankrupt on Friday in response to a petition filed by the Union Bank of India. The move leaves over 25,000 home buyers behind, haplessly awaiting the possession of their homes. 

“As all the projects of the company are financially viable, there is no chance of loss to any party or financial creditor. The order will not affect operations of any other Supertech Group Company,” Supertech said.

“The NCLT order will not impact the construction at all ongoing projects or operation of the company and we are committed to give delivery of units to allottees. We have a strong record of delivering more than 40,000 flats during the last 7 years and we shall continue to give delivery to our buyers under our ‘Mission Completion – 2022’ under which we have undertaken a target of delivering 7,000 units by December 2022,” it added.

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What is insolvency? 

Insolvency refers to the state of financial distress in which a company or an individual can no longer pay debts or carry out financial obligations. Insolvency often arises from poor financial management, increased expenditure, or a dip in cash flow. 

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When insolvent, a firm can set up meetings with creditors in order to raise alternative payment arrangements. 

Insolvency can lead to legal proceedings, in which legal action is taken against the individual or company by liquidating assets to clear debts. 

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How is insolvency different from bankruptcy? 

While insolvency is a kind of monetary distress caused when the total liabilities surpass total assets, bankruptcy is an official legal order by a court that features how a person or a company will make payments and clear debts. 

A person or a firm can be insolvent without being bankrupt for a brief period of time. If the temporary time period exceeds longer than anticipated, it can result in total bankruptcy.