India is finally moving toward a formal framework for cross-border insolvency.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, expected in the second half of the Budget Session, in March, signals a shift from todayโs ad-hoc, territorial approach to a universalist model aligned with global standards.
The current system leaves multinational restructurings in uncertainty:
โข ๐๐ผ๐ฟ๐บ๐ฎ๐ป๐ ๐ฝ๐ฟ๐ผ๐๐ถ๐๐ถ๐ผ๐ป๐: Sections 234โ235 of the IBC exist but are largely “dormant” because they require bilateral treaties that India has not yet signed with any country.
โข ๐๐๐ฑ๐ถ๐ฐ๐ถ๐ฎ๐น ๐ถ๐บ๐ฝ๐ฟ๐ผ๐๐ถ๐๐ฎ๐๐ถ๐ผ๐ป: In major cases like Jet Airways (2019), Indian courts had to “invent” cooperation protocols with foreign (Dutch) courts because there was no statutory mandate to do so.
โข ๐จ๐ป๐ฐ๐ฒ๐ฟ๐๐ฎ๐ถ๐ป ๐ฒ๐ป๐ณ๐ผ๐ฟ๐ฐ๐ฒ๐บ๐ฒ๐ป๐: Recognition of foreign insolvency orders relies on the CPC, making outcomes discretionary and inconsistent.
Adopting the UNCITRAL Model Law through a new โPart Z,โ the ๐ฎ๐ฌ๐ฎ๐ฑ ๐๐บ๐ฒ๐ป๐ฑ๐บ๐ฒ๐ป๐ proposes to introduce:
โข Structured recognition of ๐๐ผ๐ฟ๐ฒ๐ถ๐ด๐ป ๐ ๐ฎ๐ถ๐ป ๐ฎ๐ป๐ฑ ๐ก๐ผ๐ป-๐ ๐ฎ๐ถ๐ป ๐ฃ๐ฟ๐ผ๐ฐ๐ฒ๐ฒ๐ฑ๐ถ๐ป๐ด๐
โข ๐๐ถ๐ฟ๐ฒ๐ฐ๐ ๐ฎ๐ฐ๐ฐ๐ฒ๐๐ for foreign insolvency representatives to the NCLT
โข Mandatory ๐ฐ๐ผ๐๐ฟ๐-๐๐ผ-๐ฐ๐ผ๐๐ฟ๐ ๐ฐ๐ผ๐ผ๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ผ๐ป to prevent parallel conflicts
โข A framework for ๐ด๐ฟ๐ผ๐๐ฝ ๐ถ๐ป๐๐ผ๐น๐๐ฒ๐ป๐ฐ๐ across jurisdictions
The reform is promising, but key hurdles remain.
โข A likely ๐ฝ๐๐ฏ๐น๐ถ๐ฐ ๐ฝ๐ผ๐น๐ถ๐ฐ๐ ๐ฒ๐ ๐ฐ๐ฒ๐ฝ๐๐ถ๐ผ๐ป may limit automatic recognition
โข ๐๐ฎ๐ฝ๐ฎ๐ฐ๐ถ๐๐ ๐ฐ๐ผ๐ป๐๐๐ฟ๐ฎ๐ถ๐ป๐๐ as NCLT backlogs already average 853 days
โข The need for ๐๐ฟ๐๐ฒ ๐ฟ๐ฒ๐ฐ๐ถ๐ฝ๐ฟ๐ผ๐ฐ๐ถ๐๐ so Indian proceedings are respected abroad
This reform is more than legal housekeeping. If India wants to be a serious global financial hub, investors need clarity on one question: what happens when a multinational debtor collapses?
A predictable cross-border insolvency regime is the answer.
#CrossBorderInsolvency #Insolvency #Bankruptcy #IBC #India #CurareLegal
