Cross-Border Insolvency And The IBC - Need For A Comprehensive Framework

Author: LawSphereX

Category: Corporate & Insolvency

Published: 2026-08-23T19:06:06.250Z

Updated: 2026-08-30T07:08:47.422Z

CROSS-BORDER INSOLVENCY AND THE IBC: NEED FOR

A COMPREHENSIVE FRAMEWORK

Divyansh Singh, Amity University, Madhya Pradesh

ABSTRACT

This research paper examines the critical need for a comprehensive crossborder insolvency framework within India's Insolvency and Bankruptcy Code, 2016 (IBC). Despite significant reforms in domestic insolvency law, India lacks robust mechanisms to address the complex challenges posed by corporate failures with cross-jurisdictional dimensions. The paper analyzes current provisions under Section 234 and 235 of the IBC that remain unimplemented due to practical challenges. It evaluates the UNCITRAL Model Law's principles and compares insolvency frameworks across key jurisdictions like Singapore, UK, and US to identify best practices. Special attention is given to the Insolvency Law Committee's 2018 report and subsequent Draft Chapter on Cross-border Insolvency.

The paper identifies key obstacles including jurisdictional conflicts, foreign proceeding recognition, and coordination between courts across borders. It proposes integration of modified UNCITRAL provisions with suitable safeguards for India's economic sovereignty. The research concludes by recommending a balanced approach that protects local creditors while facilitating multinational insolvency proceedings in an increasingly interconnected global economy. Keywords: Cross-border insolvency, Insolvency and Bankruptcy Code, UNCITRAL Model Law, foreign proceedings recognition, economic sovereignty, multinational corporate restructuring, jurisdictional conflicts, Insolvency Law Committee, Draft Chapter on Cross-border Insolvency, bilateral insolvency agreements.

INTRODUCTION

A. Background of Cross-border Insolvency Cross-border insolvency represents a complex legal phenomenon arising from globalization of business operations. It occurs when an insolvent debtor possesses assets in multiple jurisdictions. Corporate entities increasingly operate across national boundaries through integrated structures. These multinational operations create jurisdictional complexities during financial distress. Assets, creditors, and operations may span numerous countries with conflicting legal systems. The resulting legal uncertainty complicates efficient resolution of financial distress. This uncertainty affects creditor rights, priority rules, and recovery mechanisms. 1 Two competing theoretical approaches dominate cross-border insolvency discourse. The territorial approach treats insolvency proceedings as strictly national matters.

Each country asserts exclusive jurisdiction over assets within its borders. This creates multiple parallel proceedings without coordination mechanisms. Conversely, the universalist approach advocates single proceedings with worldwide effect. It centralizes proceedings where the debtor maintains primary connections. Modified universalism emerged as a pragmatic middle path balancing these extremes. It recognizes primary proceedings while permitting ancillary proceedings elsewhere. This approach acknowledges sovereignty concerns while facilitating coordination. 2 The international community recognized the need for harmonized approaches in the 1990s. Increased cross-border trade highlighted insolvency framework inadequacies. The United Nations Commission on International Trade Law (UNCITRAL) took the lead. It developed the Model Law on Cross-Border Insolvency in 1997.

The Model Law established mechanisms for recognition of foreign proceedings. It created predictable frameworks for relief and cooperation. The Model Law represents the most successful harmonization attempt in this field. 1 Philip R. Wood, “Principles of International Insolvency” 11-18 (Sweet & Maxwell, 2d ed. 2007); Ian F. Fletcher, “Insolvency in Private International Law” 5-12 (Oxford University Press, 2d ed. 2005). 2 Lynn M. LoPucki, “Cooperation in International Bankruptcy: A Post-Universalist Approach,” 84 Cornell L. Rev. 696, 702-09 (1999); Jay Lawrence Westbrook, “Theory and Pragmatism in Global Insolvencies: Choice of Law and Choice of Forum,” 65 Am. Bankr. L. J. 457, 461-68 (1991).

It has been adopted by 51 jurisdictions including major economies like US and UK.3 Cross-border insolvency cases reveal consistent challenges requiring coordinated solutions. The Lehman Brothers collapse in 2008 involved entities in 80 countries. It highlighted the catastrophic impact of uncoordinated proceedings. The Nortel Networks insolvency faced similar challenges with assets spanning 40 countries. These high-profile cases demonstrated how fragmented proceedings destroy value. They increased recognition that effective frameworks require cooperation mechanisms. Courts developed ad hoc protocols addressing coordination gaps. These judicial innovations informed subsequent legislative reforms worldwide.4 B. Research Objectives

1. To critically evaluate the adequacy of cross-border insolvency provisions within India's

IBC framework

2. To analyze approaches adopted by leading jurisdictions for cross-border insolvency

resolution

3. To formulate recommendations for a comprehensive cross-border insolvency

framework suited to India's needs C. Research Questions

1. What are the limitations of the current cross-border insolvency provisions in the IBC?

2. To what extent can the UNCITRAL Model Law on Cross-border Insolvency be adapted

to Indian legal context?

3. How can India balance protection of local creditors' interests with international

cooperation requirements?

3 UNCITRAL, “UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and

Interpretation” (2014), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/1997model-law-insol-2013-guide-enactment-e.pdf. 4 Edward J. Janger, “Virtual Territoriality,” 48 Colum. J. Transnat'l L. 401, 410-18 (2010); John A.E. Pottow, “Procedural Incrementalism: A Model for International Bankruptcy,” 45 Va. J. Int'l L. 935, 942-51 (2005).

D. Research Methodology

This research adopts a doctrinal methodology to examine legal frameworks, provisions, and judicial precedents relating to cross-border insolvency in India and globally. Primary sources including the IBC, 2016, Companies Act, 2013, FEMA, 1999, and the UNCITRAL Model Law are analyzed to understand the legal framework. The research evaluates judicial decisions including Jet Airways (India) Ltd. v. State Bank of India (2019) and State Bank of India v. Videocon Industries Limited (2018) to identify judicial approaches to cross-border insolvency challenges. Secondary sources including reports from the Insolvency Law Committee, scholarly articles, and comparative studies are examined. Comparative legal analysis is utilized to examine approaches adopted by key jurisdictions including Singapore, United Kingdom, United States and EU nations.

THE CURRENT

LEGAL FRAMEWORK

A.

The Insolvency and Bankruptcy Code, 2016: An Overview The Insolvency and Bankruptcy Code, 2016 (IBC) represents a landmark legislative reform in India's insolvency regime. It was enacted to consolidate and amend laws relating to reorganization and insolvency resolution. The Code aims to promote entrepreneurship and credit availability while balancing interests of all stakeholders. It introduced a time-bound resolution process replacing multiple laws that previously governed insolvency. The Code established the Insolvency and Bankruptcy Board of India (IBBI) as the regulatory body. IBBI oversees insolvency professionals, information utilities and other institutions under the Code5. The IBC follows a creditor-in-control model unlike the earlier debtor-in-possession system. Upon admission of insolvency application, a Committee of Creditors (CoC) is formed.

This committee makes key decisions regarding the corporate debtor's fate. The Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India upheld the constitutional validity of the Code. The Court recognized IBC's role in addressing endemic delays in insolvency resolution. It noted that the Code shifted the focus from “inability to pay debt” to “determination of default”6.

5 The Insolvency and Bankruptcy Code, 2016, No. 31, Acts of Parliament, 2016 (India); Insolvency and

Bankruptcy Board of India, “The Insolvency and Bankruptcy Code, 2016: A Miscellany of Perspectives” (2019). 6 Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17; Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, (2020) 8 SCC 531.

The Code provides for a Corporate Insolvency Resolution Process (CIRP) that must conclude within 330 days. This includes any extension granted by the Adjudicating Authority. The process begins when a financial creditor, operational creditor, or corporate debtor itself files an application. The National Company Law Tribunal (NCLT) serves as the Adjudicating Authority for corporate persons. Appeals from NCLT lie with the National Company Law Appellate Tribunal (NCLAT). The CIRP involves appointment of a resolution professional who takes over management of the corporate debtor. The resolution professional invites resolution plans from potential investors. The plan approved by 66% of the CoC receives binding force upon NCLT approval7. The IBC has significantly improved India's position in the World Bank's Ease of Doing Business rankings.

The time taken for insolvency resolution decreased from 4. 3 years to 1. 6 years in recent cases. The recovery rate improved from 26 cents on the dollar to approximately

43 cents. However, the Code's primary focus remains on domestic insolvency proceedings with

limited provisions for cross-border scenarios8. B. Existing Provisions for Cross-border Insolvency in the IBC The IBC contains only two provisions that address cross-border insolvency issues - Section

234 and Section 235. Section 234 empowers the Central Government to enter into bilateral

agreements with other countries. These agreements facilitate application of the Code's provisions to assets located in foreign jurisdictions. Section 235 provides for issuance of letter of request by the adjudicating authority. This letter requests evidence or action concerning assets of corporate debtor situated in foreign countries9. These provisions follow a territorial approach to cross-border insolvency. They operate through bilateral arrangements rather than a universal framework. The law reflects caution regarding yielding jurisdiction over domestic assets to foreign insolvency proceedings. However, both sections remain inoperative until the Central Government notifies bilateral agreements. Not a 7 Insolvency and Bankruptcy Board of India, “Insolvency and Bankruptcy Code: A Pathway to Responsible Business” (2021), https://www. ibbi. gov.

in/uploads/publication/2021-12-15-163719-uvtpbce9e7a3cf8e33c31c9ced8c472e4ebca. pdf.

8 World Bank Group, “Doing Business 2020

Comparing Business Regulation in 190 Economies” (2020), http://documents.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing- Business-Regulation-in-190-Economies.pdf.

9 The Insolvency and Bankruptcy Code, 2016, § 234, 235, No. 31, Acts of Parliament, 2016 (India).

single agreement has been notified since the Code's enactment in 2016. This creates a significant legislative vacuum for cross-border insolvency cases10. In the absence of a comprehensive framework, courts have addressed cross-border issues pragmatically. In State Bank of India v. Jet Airways (India) Ltd. , NCLAT recognized the Dutch Court's insolvency proceedings. NCLAT approved a Cross-Border Insolvency Protocol between Indian and Dutch administrators. This unprecedented judicial cooperation occurred despite lack of formal statutory framework. The tribunal emphasized “modified universalism” as guiding principle for cross-border cooperation11. Similarly, in Videocon Industries Limited insolvency case, NCLT Mumbai consolidated 13 separate proceedings. The consolidation included overseas oil assets of the corporate debtor.

NCLT acknowledged interconnectedness of multiple entities across jurisdictions. Yet it struggled with jurisdictional limitations in absence of cross-border provisions. The resolution faced challenges in addressing claims from foreign creditors against overseas subsidiaries12. C. Limitations of the Current Framework The current provisions suffer from multiple limitations rendering them largely ineffective. Primarily, the bilateral agreement approach under Section 234 creates a piecemeal system. It requires negotiating separate agreements with each country. This process is time-consuming and creates inconsistent standards across jurisdictions. It fails to address urgent needs of crossborder insolvency cases that require immediate coordination13. Another significant limitation is the lack of clear protocols for recognition of foreign proceedings.

Unlike the UNCITRAL Model Law, the IBC provides no mechanism for automatic or discretionary recognition. There are no provisions specifying effects of recognition or relief available to foreign representatives. This creates uncertainty for foreign creditors seeking to participate in Indian insolvency proceedings. Conversely, Indian 10 Ministry of Corporate Affairs, “Report of the Insolvency Law Committee on Cross Border Insolvency” (2018), https://www. mca. gov. in/Ministry/pdf/CrossBorderInsolvencyReport_22102018. pdf. 11 State Bank of India v. Jet Airways (India) Ltd. , Company Appeal (AT) (Insolvency) No. 707 of 2019, NCLAT (2019). 12 State Bank of India v. Videocon Industries Limited, MA 1306/2018 in CP No. 02/2018, NCLT Mumbai (2018).

13 Aparna Ravi, “Indian Insolvency Law and the Need for Reform”, 47 Int'l Law. 273 (2013).

insolvency professionals face hurdles accessing assets located abroad14. The IBC also lacks provisions for concurrent proceedings in multiple jurisdictions. There is no framework for determining the center of main interests (COMI). Courts have no statutory guidance on cooperation and communication with foreign courts. Protocols for sharing information between concurrent proceedings remain undefined. This absence prevents coordinated resolution of corporate groups spanning multiple jurisdictions. The Essar Steel and Videocon cases highlighted these gaps when addressing interconnected global operations15. Further limitations include absence of provisions for foreign creditor participation. While the Code defines “creditor” broadly, practical barriers exist for foreign creditors. There is no clarity on treatment of foreign judgments related to insolvency claims.

The law provides no specific rules for applying foreign law to certain aspects of proceedings. Issues like set-off rights and transaction avoidance face conflicts of law problems. These gaps create legal uncertainty deterring foreign investment and cross-border financing16. INTERNATIONAL STANDARDS AND BEST PRACTICES A. UNCITRAL Model Law on Cross-border Insolvency The UNCITRAL Model Law on Cross-border Insolvency represents the most significant international framework addressing multinational insolvency issues. It was adopted in 1997 after extensive consultations among member states. The Model Law provides a template for countries to incorporate into their domestic legislation. It aims to establish efficient mechanisms for dealing with cross-border insolvency cases. The framework promotes cooperation between courts of different jurisdictions.

It enables recognition of foreign proceedings with predictable effects17.

14 UNCITRAL, “UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and

Interpretation” (2014), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/1997model-law-insol-2013-guide-enactment-e.pdf. 15 ArcelorMittal India Private Limited v. Satish Kumar Gupta, (2019) 2 SCC 1; Insolvency and Bankruptcy Board of India, “Building the New Code: The First Five Years and Beyond” (2022). 16 Anurag Das, “Cross-Border Insolvency: The Need for Judicial Cooperation” 54 Cambridge L.J. 295 (2021); William H. Widen, “The Role of Comity in Transnational Insolvency Proceedings” 4 Int'l Insolvency Rev. 7 (2022).

17 UNCITRAL, “UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and

Interpretation” (2014), https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/1997model-law-insol-2013-guide-enactment-e.pdf.

The Model Law operates on four fundamental principles that form its conceptual foundation. First is “access” which allows foreign representatives direct access to domestic courts. Second is “recognition” which establishes simplified procedures for recognizing qualifying foreign proceedings. Third is “relief” which provides for immediate protection of assets upon recognition. Fourth is “cooperation” which mandates coordination between courts and insolvency professionals across borders. These principles reflect the modified universalism approach balancing global cooperation with domestic concerns18. Recognition forms the cornerstone of the Model Law's operational framework. It divides foreign proceedings into “main” and “non-main” categories. Main proceedings occur where the debtor has its center of main interests (COMI).

Non-main proceedings take place where the debtor merely has an “establishment”. The distinction determines the scope of automatic relief available upon recognition. Main proceedings receive extensive automatic relief including stay on creditor actions. Non-main proceedings receive more limited discretionary relief from the court. This distinction balances universalism with territorial concerns19. The Model Law incorporates important safeguards to protect domestic interests. Article 6 provides a public policy exception allowing courts to reject foreign proceedings. Article 22 requires courts to ensure adequate protection of local creditors. The “sufficient protection” standard permits courts to condition relief on safeguards for domestic stakeholders. These provisions acknowledge sovereign concerns while facilitating international cooperation.

They provide flexibility crucial for widespread adoption across different legal systems20. As of 2023, the Model Law has been adopted by 51 jurisdictions including major economies. Each adoption reflects local adaptations addressing specific sovereignty concerns. The effectiveness of the Model Law depends on its incorporation into national legal systems. Its non-binding nature allows states to modify provisions according to local needs. This flexibility explains its success as an international standard despite diverse legal traditions. The UNCITRAL Secretariat continues to monitor its implementation providing interpretation 18 Jenny Clift, “The UNCITRAL Model Law on Cross-Border Insolvency—A Legislative Framework to Facilitate Coordination and Cooperation in Cross-Border Insolvency,” 12 Tul. J. Int'l & Comp. L. 307, 309-15 (2004).

19 Look Chan Ho, “Cross-Border Insolvency

Principles and Practice” 25-36 (Sweet & Maxwell, 2016).

20 Irit Mevorach, “Modified Universalism as Customary International Law,” 96 Tex. L. Rev. 1403, 1415-22 (2018). guidance21. B. UK and European Union Approach The United Kingdom adopted the UNCITRAL Model Law through the Cross-Border Insolvency Regulations 2006. The UK implementation closely follows the original text with minimal modifications. British courts have developed a substantial jurisprudence interpreting Model Law provisions. The landmark case of Rubin v. Eurofinance established key principles regarding recognition and enforcement. The court held that foreign insolvency judgments must satisfy common law recognition rules. This decision highlighted the importance of examining underlying policy considerations in cross-border cases22. The UK courts have developed sophisticated approaches to determining COMI.

In Re Stanford International Bank, the Court of Appeal established that COMI must be ascertained by reference to criteria that are objective and ascertainable by third parties. The court emphasized the importance of looking beyond mere registered office presumption. It considered factors including location of headquarters administrative functions and creditor perceptions. These precedents provide valuable guidance for jurisdictions developing cross-border frameworks including India23. The European Union created a regional framework through the EU Insolvency Regulation. The Regulation was first enacted in 2000 and later revised in 2015 (recast). Unlike the Model Law it creates directly applicable rules rather than a template. It operates on automatic recognition principle between member states. Main proceedings opened in one member state are immediately recognized across the EU.

Secondary proceedings may only be opened where the debtor has an establishment. They are restricted to assets located in that territory24. The EU approach differs from the Model Law in several significant aspects. It creates a unified system applicable across all member states. The regulation contains mandatory jurisdiction rules based on COMI concept. It includes specific provisions for corporate groups addressing related entities insolvency. The recast regulation introduced group coordination proceedings UNCITRAL, “Status: UNCITRAL Model Law on Cross-Border Insolvency (1997),” https://uncitral. un. org/en/texts/insolvency/modellaw/cross-border_insolvency/status.

22 Rubin v. Eurofinance SA, [2012] UKSC 46, [2013] 1 AC 236.

23 Re Stanford International Bank Ltd (In Receivership), [2010] EWCA Civ 137, [2011] Ch 33.

24 Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), 2015 O. J. (L 141) 19. for related entities. It established cooperation duties between insolvency practitioners and courts across jurisdictions. These innovations represent advanced solutions to complex crossborder challenges25. The post-Brexit landscape has created new complexity in UK-EU insolvency cooperation. The UK's departure from the EU means the Insolvency Regulation no longer applies to cross-border cases. Instead the UK relies on the UNCITRAL Model Law and common law principles. EU member states must now treat the UK as a third country under their implementation of the Model Law. This transition highlights the importance of flexible international frameworks. It demonstrates how domestic changes can impact cross-border insolvency effectiveness26. C.

Singapore Model Singapore has emerged as a leader in cross-border insolvency innovation particularly in Asia. The Singapore model represents a hybridization of international best practices. The Companies (Amendment) Act 2017 incorporated the UNCITRAL Model Law with strategic modifications. Singapore's implementation added provisions addressing local concerns while maintaining core principles. The amendments positioned Singapore as an international hub for debt restructuring and insolvency27. The Singapore approach added innovative features beyond standard Model Law provisions. It introduced a new “super priority” financing mechanism resembling US Chapter 11 DIP financing. This allows distressed companies to access new funding during reorganization. The law also strengthened pre-packaged restructuring options facilitating efficient rescue.

It expanded moratorium protections to include foreign companies with “substantial connection” to Singapore. These enhancements address practical challenges in multinational restructurings28. Singapore courts have demonstrated progressive interpretation of cross-border provisions. In Re Zetta Jet Pte Ltd the Singapore High Court recognized US Chapter 11 proceedings. It 25 Gabriel Moss, Ian Fletcher & Stuart Isaacs, “Moss, Fletcher and Isaacs on the EU Regulation on Insolvency Proceedings” 32-40 (3d ed. , Oxford University Press, 2016). 26 Howard Morris & Jai Mudhar, “Brexit: The Future of European Restructuring and Insolvency Practice in the UK,” 18 Bus. L. Int'l 337, 340-48 (2017).

27 Companies (Amendment) Act 2017 (No. 15 of 2017) (Sing.).

28 Wee Meng Seng, “Whither the Scheme of Arrangement in Singapore

More Chapter 11, Less Scheme?” (2017)

29 Singapore Academy of L. J. 940, 945-52.

granted broad relief to the foreign representative despite jurisdictional challenges. The court emphasized the importance of international cooperation in addressing complex business failures. In Pacific Andes Resources Development Ltd, the court coordinated proceedings with parallel Hong Kong insolvency. These cases demonstrate judicial commitment to cooperative frameworks29. The Singapore model also incorporates institutional support for cross-border cases. The establishment of the Insolvency and Restructuring Forum facilitates expertise development. Singapore has specialized insolvency judges within the commercial division of the High Court. The country invests in capacity building for insolvency practitioners handling complex international cases. These institutional arrangements complement legislative provisions enhancing practical implementation.

They provide valuable lessons for countries seeking to develop comprehensive frameworks30. D. US Chapter 15 Framework The United States incorporated the UNCITRAL Model Law through Chapter 15 of the US Bankruptcy Code in 2005. Chapter 15 replaced former Section 304 which had addressed international insolvency. The new framework established structured procedures for US courts to recognize foreign proceedings. It created predictable relief mechanisms for foreign representatives seeking assistance. Chapter 15 significantly enhanced the United States' ability to coordinate multinational cases31. The Chapter 15 framework centers on the recognition process as gateway to relief. A foreign representative files a petition in US bankruptcy court seeking recognition. The court determines whether the foreign proceeding qualifies as main or non-main.

This determination turns on the location of the debtor's COMI or establishment. Upon recognition as a foreign main proceeding the court grants automatic relief. This includes stay of actions against the debtor's US assets. The court may grant additional discretionary relief regardless of recognition status32. 29 Re Zetta Jet Pte Ltd, [2018] SGHC 16; Re Pacific Andes Resources Development Ltd. , [2016] SGHC 210. 30 Tan Chong Huat & Smitha Menon, “The Singapore Story: Cross-Border Restructuring,” 36 Int'l Fin. L. Rev. 38, 39-41 (2017).

31 11 U.S.C. §§ 1501-1532 (2018).

32 Samuel L. Bufford, “United States International Insolvency Law 2008,” 19 J. Bankr. L. & Prac. 3 Art. 1, 6-12 (2010).

US courts have developed significant jurisprudence interpreting COMI determination. In Re Fairfield Sentry, the Second Circuit established that COMI should be determined as of the Chapter 15 filing date. In Re Bear Stearns, the court held that mere registration in a jurisdiction without operational presence was insufficient. In Re Ocean Rig, the court recognized COMI shifting through legitimate restructuring efforts. These decisions provide valuable guidance on handling complex multinational insolvencies across diverse corporate structures33. Chapter 15 includes important public policy limitations protecting US interests. Section 1506 allows courts to refuse recognition or relief contrary to public policy. Courts have interpreted this exception narrowly applying it only in exceptional circumstances.

In Re Toft, the court invoked the exception to prevent email interception violating privacy laws. In Re Gold & Honey, the court refused recognition where foreign proceedings violated US automatic stay. These cases demonstrate balanced approach to reconciling international cooperation with domestic concerns34.

CHALLENGES

IN IMPLEMENTING CROSS-BORDER INSOLVENCY FRAMEWORK IN INDIA A. Jurisdictional Issues and Recognition of Foreign Proceedings Implementation of a cross-border insolvency framework in India faces substantial jurisdictional hurdles. Indian courts traditionally adhere to territorial principles regarding insolvency. They assert jurisdiction over assets located within national boundaries regardless of foreign proceedings. The fundamental concept of sovereignty creates resistance against recognition of foreign judgments. This territorial approach conflicts with universalist principles embodied in the UNCITRAL Model Law. The tension between these competing theories presents significant obstacles for effective implementation. 35 Indian courts lack clear statutory guidance for recognizing foreign insolvency proceedings.

The current framework under Civil Procedure Code Section 13 limits recognition of foreign 33 In re Fairfield Sentry Ltd. , 714 F. 3d 127 (2d Cir. 2013); In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd. , 389 B. R. 325 (S. D. N. Y. 2008); In re Ocean Rig UDW Inc. , 570 B. R. 687 (Bankr. S. D. N. Y. 2017).

34 In re Toft, 453 B. R. 186 (Bankr. S. D. N. Y. 2011); In re Gold & Honey, Ltd. , 410 B. R. 357 (Bankr. E. D. N. Y. 2009). 35 Sumant Batra, “Cross-Border Insolvency: An Indian Perspective” 17 Int'l Insolvency Rev. 73, 76 (2020); V. Umakanth, “Corporate Insolvency in India: The Influence of Globalization,” 2 Comp. L. J. India 84, 89 (2022). judgments. It imposes stringent conditions that many foreign insolvency orders cannot satisfy. The courts in Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. demonstrated reluctance to enforce foreign insolvency orders. The Supreme Court emphasized that procedural requirements cannot be circumvented through judicial interpretation. This restrictive approach complicates recognition of foreign proceedings essential for cross-border cooperation.

36 The absence of center of main interests (COMI) determination criteria creates substantial uncertainty. Indian courts have no statutory basis for determining which foreign proceedings merit recognition. They lack guidelines for assessing whether foreign proceedings qualify as main or non-main. The NCLT in State Bank of India v. Jet Airways (India) Ltd. struggled with this distinction. It ultimately relied on ad hoc cooperation rather than principled recognition. This uncertainty disadvantages both Indian companies with foreign assets and foreign creditors with claims in India. 37 Public policy exceptions present additional jurisdictional complexities for implementing crossborder frameworks. Indian courts frequently invoke public policy to reject foreign judgments. The Supreme Court in Vijay Karia v. Prysmian Cavi E Sistemi SRL narrowed public policy interpretation.

Yet lower courts continue applying broad interpretations in insolvency matters. This unpredictable application creates substantial risks for cross-border stakeholders. It undermines predictability essential for international commerce and investment flows. 38 B. Coordination Between Courts and Insolvency Professionals Effective coordination between courts and insolvency professionals across jurisdictions remains a significant challenge. Indian adjudicating authorities lack established protocols for communication with foreign courts. No formal guidelines exist for handling concurrent proceedings in multiple jurisdictions. The NCLT and NCLAT operate without standardized procedures for international judicial cooperation. This absence creates inefficiencies and 36 Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. , (2018) 2 SCC 674; Civil Procedure Code, 1908, § 13.

37 State Bank of India v. Jet Airways (India) Ltd. , Company Appeal (AT) (Insolvency) No. 707 of 2019, NCLAT (2019); Insolvency and Bankruptcy Board of India, “Report on Cross-Border Insolvency Framework” 23-27 (2022). 38 Vijay Karia v. Prysmian Cavi E Sistemi SRL, (2020) 11 SCC 1; Renusagar Power Co. Ltd. v. General Electric Co. , (1994) Supp. (1) SCC 644. unpredictability in cross-border cases. Coordination gaps result in conflicting decisions regarding identical issues. 39 Indian insolvency professionals face substantial limitations when managing cross-border cases. They lack clear authority to act in foreign jurisdictions. The Insolvency and Bankruptcy Board of India (IBBI) regulations do not address international dimensions. Resolution professionals encounter obstacles obtaining recognition abroad without statutory backing.

Conversely, foreign representatives struggle gaining access to Indian proceedings. The Jet Airways insolvency highlighted these challenges requiring ad hoc solutions. These limitations impede efficient resolution of multinational corporate failures. 40 Information sharing mechanisms between Indian and foreign proceedings remain underdeveloped. No established channels exist for exchanging critical debtor information across borders. Confidentiality rules often restrict sharing essential financial data with foreign courts. Insolvency professionals cannot access global asset information without cooperation frameworks. This information asymmetry complicates fair and efficient resolution. It enables sophisticated debtors to exploit coordination gaps through asset concealment. Technological solutions for secure information exchange remain unexplored. 41 C.

Asset Recovery and Distribution Mechanisms Asset recovery across jurisdictions represents a critical challenge for cross-border insolvency implementation. Indian insolvency professionals struggle enforcing rights over assets located abroad. They face procedural barriers investigating and recovering offshore assets. The absence of recognition frameworks limits enforcement of avoidance actions internationally. These limitations became evident in the Kingfisher Airlines case. Recovery efforts against foreign assets faced substantial obstacles despite clear evidence. The resulting inefficiencies 39 Justice Rajesh Bindal, “Judicial Cooperation in Cross-Border Insolvency Cases,” Address at INSOL India Annual Conference (Dec. 2, 2022); Ministry of Corporate Affairs, “Report of the Insolvency Law Committee on Cross Border Insolvency” 45-52 (2018), https://www. mca. gov.

in/Ministry/pdf/CrossBorderInsolvencyReport_22102018. pdf. 40 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; Dutch Trustee v. Jet Airways (India) Ltd. , MA 2707/2019 in CP 2205/2019, NCLT Mumbai (2019). 41 Reserve Bank of India, “Master Directions on Cross-Border Insolvency,” RBI/FEMA/2023-24/12 (Oct. 2023); Insolvency and Bankruptcy Board of India, “Cross-Border Insolvency Rules/Regulations Committee: Second Report” 67-73 (2020). significantly reduced creditor recoveries. 42 Foreign exchange regulations create additional complexity for asset repatriation. The Foreign Exchange Management Act imposes restrictions on cross-border fund transfers. These regulations limit flexibility in multinational restructuring plans. Resolution professionals must navigate complex approval processes for transferring assets.

Regulatory complexity increases transaction costs and delays critical timelines. These barriers complicate efficient recovery and distribution mechanics essential for successful resolutions. 43 Distribution priorities create significant challenges when reconciling competing jurisdictional rules. Different countries apply varying priority frameworks for creditor claims. Indian law grants preferences to workers dues government claims and secured creditors. These priorities may conflict with distribution schemes in foreign proceedings. No framework exists for resolving such conflicts in concurrent proceedings. This uncertainty creates incentives for creditors to forum shop across jurisdictions. It impedes cohesive resolution of multinational insolvency cases. 44 RECENT DEVELOPMENTS AND PROPOSED REFORMS A.

Report of the Insolvency Law Committee, 2018 The Ministry of Corporate Affairs constituted the Insolvency Law Committee in 2018 to address cross-border insolvency issues. The Committee submitted its comprehensive report in October 2018 analyzing global frameworks. It evaluated the existing provisions under Sections

234 and 235 of the IBC. The Committee found these provisions inadequate for addressing

complex cross-border scenarios. It noted that bilateral agreements approach under Section 234 faced practical implementation barriers. The report highlighted significant gaps in Indian insolvency framework compared to international standards.45 42 State Bank of India v. Kingfisher Airlines, NCLT Bengaluru, CP/231/IB/2017; N. Jain, “Enforcement of Avoidance Actions in Cross-Border Cases,” 5 Insolvency & Bankruptcy J. 34 (2022).

43 Foreign Exchange Management Act, 1999; Reserve Bank of India, “Foreign Exchange Management (Cross

Border Merger) Regulations, 2018,” Notification No. FEMA 389/2018-RB. 44 The Insolvency and Bankruptcy Code, 2016, § 53, No. 31, Acts of Parliament, 2016 (India); M. Sharma & S. Daga, “Priority Rules in Cross-Border Insolvency: The Indian Experience,” 42 Comp. Law. 219 (2023). 45 Ministry of Corporate Affairs, “Report of the Insolvency Law Committee on Cross Border Insolvency” 12-18 (2018), https://www.mca.gov.in/Ministry/pdf/CrossBorderInsolvencyReport_22102018.pdf.

The Committee strongly recommended adoption of UNCITRAL Model Law with appropriate modifications. It recognized the Model Law's flexibility allowing country-specific adaptations while maintaining core principles. The Committee suggested that India should incorporate the Model Law as a separate chapter. This approach would preserve the existing IBC framework while adding cross-border provisions. The Committee emphasized the importance of reciprocity principle in any proposed framework. This would ensure that foreign jurisdictions offer comparable treatment to Indian proceedings. 46 The 2018 report addressed concerns regarding economic sovereignty and public policy. It recommended explicit public policy exceptions protecting domestic interests. The Committee proposed mechanisms safeguarding rights of domestic creditors in cross-border scenarios.

It emphasized Indian courts' authority to refuse enforcement of foreign judgments. This refusal would apply where recognition would contravene domestic public policy. The Committee balanced internationalist approach with protection of domestic interests. This reflected awareness of economic sovereignty concerns among stakeholders. 47 B. Draft Chapter on Cross-border Insolvency Following the Insolvency Law Committee's recommendations, the Ministry prepared a Draft Chapter. This Draft Chapter on Cross-border Insolvency was released for public consultation in 2018. It proposed integration of the UNCITRAL Model Law principles with suitable modifications. The Draft Chapter retained core provisions for recognition of foreign proceedings. It classified foreign proceedings as either “foreign main” or “foreign non-main” proceedings.

This classification determined automatic versus discretionary relief availability upon recognition. 48 The Draft Chapter contained important modifications reflecting India's unique legal context. It included reciprocity requirement limiting application to countries notified by Central Government. This departure from the Model Law addressed concerns about asymmetric treatment. The Draft proposed exclusion of financial service providers from cross-border

46 Insolvency Law Committee, “Recommendations on Adoption of the UNCITRAL Model Law for Cross-Border

Insolvency” 24-31 (2018). 47 Ajay Shah & Susan Thomas, “Public Policy Concerns in Cross-Border Insolvency: The Indian Perspective” 15 Insolvency & Restructuring Int'l 42, 45-47 (2021). Ministry of Corporate Affairs, “Draft Chapter on Cross Border Insolvency” (2018), https://www. mca. gov. in/Ministry/pdf/PublicNoiceCrossBorder_20062018. pdf. provisions. This aligned with domestic approach where financial institutions follow separate resolution regimes. The Draft maintained supremacy of Indian proceedings over foreign nonmain proceedings. These modifications balanced international cooperation with domestic policy objectives. 49 The proposed framework established clear procedures for foreign representative access. It permitted direct application to Indian adjudicating authorities without cumbersome procedures.

The Draft Chapter outlined evidence requirements for recognition of foreign proceedings. It established presumptions regarding registered office as debtor's center of main interests. The framework detailed effects of recognition including automatic stay for main proceedings. It provided for discretionary relief based on necessity and appropriateness standards. These procedural provisions aimed to create predictable outcomes for stakeholders. 50 The Draft Chapter incorporated significant protections for domestic creditors and interests. It established “adequate protection” standard for local creditors during relief determination. The framework required consideration of domestic creditor interests in all decisions. It preserved priority rules under the IBC ensuring consistent treatment in distribution.

The Draft maintained public policy exception allowing courts to reject harmful proceedings. These safeguards addressed concerns about foreign proceedings disadvantaging Indian creditors. They reflected the importance of balancing cooperation with protection of local interests. 51 C. Cross-border Insolvency Rules/Regulations Committee Recommendations The Ministry constituted a Cross-border Insolvency Rules/Regulations Committee (CBIRC) in

2020. This specialized committee was tasked with developing implementing regulations for

the proposed framework. The CBIRC submitted its recommendations identifying critical operational aspects. It addressed detailed procedural mechanisms for effective implementation. The Committee focused on practical challenges beyond legislative provisions. It recommended 49 Sumant Batra, “India's Cross-Border Insolvency Journey: The Road Ahead” 8 INSOL Int'l Tech. Series 12, 17-

23 (2020).

50 Draft Chapter on Cross Border Insolvency, Articles 15-20 (2018); Dharmendra Kumar, “The Proposed Cross- Border Insolvency Framework in India: A Comparative Analysis” 14 Insolvency L. J. 85, 89-92 (2021). 51 Aparna Ravi, “The New Cross-Border Insolvency Framework in India: Adequate Protection for Domestic Creditors? ” 9 Nat'l L. Sch. India Rev. 180, 185-91 (2019). comprehensive amendments to existing regulations and rules under the IBC. 52 The CBIRC developed detailed protocols for communication between courts across jurisdictions. It recommended adoption of judicial communication guidelines similar to international standards. The Committee emphasized importance of direct court-to-court protocols in complex cases. It suggested establishment of secure communication channels protecting confidential information.

The recommendations included templates for cooperation agreements between insolvency professionals. These protocols aimed to address practical coordination challenges in cross-border cases. 53 The Committee proposed rules for determining center of main interests (COMI) with greater precision. It recommended factors beyond registered office including operational headquarters and management location. The CBIRC addressed potential COMI manipulation through lookback periods. It suggested courts examine debtor activities in months preceding filing. The recommendations provided guidance for handling establishment criteria in non-main proceedings. These detailed standards aimed to reduce uncertainty in recognition determinations. 54 The CBIRC addressed technological and operational aspects of cross-border cooperation.

It recommended development of electronic platforms for information sharing between jurisdictions. The Committee proposed standardized formats for recognition applications reducing processing delays. It suggested specialized training programs for judges handling cross-border cases. The recommendations included creation of cross-border insolvency units within NCLT benches. These practical measures aimed to overcome operational barriers to effective implementation. 55 CONCLUSION & SUGGESTIONS The IBC requires urgent incorporation of comprehensive cross-border insolvency provisions. 52 Ministry of Corporate Affairs, “Constitution of Cross Border Insolvency Rules/Regulations Committee” F. No. 30/27/2018-Insolvency Section (June 26, 2020).

53 Cross Border Insolvency Rules/Regulations Committee, “First Report on Rules and Regulatory Framework for Cross Border Insolvency Resolution” 34-42 (2021). 54 Pratik Datta, “Finding COMI: Guidance from the Cross Border Rules Committee” 7 Insolvency & Bankruptcy Regime J. 28, 32-38 (2022).

55 Insolvency and Bankruptcy Board of India, “Cross Border Operational Framework” (IBBI/2022-

23/GN/REG095) (2022).

Indian insolvency law has matured significantly since 2016 but remains incomplete without robust cross-border mechanisms. The existing provisions under Sections 234 and 235 have proven inadequate for addressing multinational corporate failures. Their bilateral approach creates piecemeal solutions unsuitable for global business realities. The absence of recognition frameworks leads to inconsistent judicial outcomes. This creates legal uncertainty deterring international investment and cross-border financing. 56 The UNCITRAL Model Law offers a balanced template adaptable to Indian economic priorities. Its adoption with appropriate modifications represents the most viable path forward. The Model Law's flexibility permits India to preserve sovereignty while facilitating international cooperation.

The reciprocity requirement proposed in the Draft Chapter addresses concerns about asymmetric treatment. Public policy safeguards protect domestic creditors from potentially unfair foreign proceedings. These modifications maintain essential protections while enabling effective cross-border coordination. 57 Several specific recommendations can enhance the proposed framework effectiveness. First, India must implement detailed COMI determination criteria beyond registered office presumptions. Factors should include operational headquarters location management functions and creditor perceptions. Second, specialized benches within NCLT should handle cross-border cases ensuring judicial expertise. Third, technical infrastructure for secure court-to-court communication requires development. Fourth, standardized protocols for information sharing should address confidentiality concerns.

These operational enhancements would strengthen the legislative framework. 58 Group insolvency provisions must be incorporated within cross-border framework. Modern corporate structures operate through integrated multinational entities. The current entity-byentity approach ignores economic realities of corporate groups. Coordinated resolution of related entities maximizes value preservation. Singapore and EU approaches offer valuable models for group coordination. The framework should permit joint administration while 56 Vidhi Centre for Legal Policy, “Designing a Framework for Cross-Border Insolvency in India” 37-42 (2018), https://vidhilegalpolicy. in/research/designing-a-framework-for-cross-border-insolvency-in-india/.

57 M. S. Sahoo & Anuradha Guru, “Indian Insolvency Law and the UNCITRAL Model

The Way Forward,” 15 SCJ 76, 81-85 (2022); Ministry of Corporate Affairs, “Report of the Insolvency Law Committee on Cross Border Insolvency” 92-97 (2018), https://www.mca.gov.in/Ministry/pdf/CrossBorderInsolvencyReport_22102018.pdf.

58 Insolvency and Bankruptcy Board of India, “Discussion Paper on Cross Border Insolvency Rules and

Regulations” 18-25 (2022); Aparna Ravi, “The Implementation Challenge: Making Cross-Border Insolvency Work in India” 5 Insolvency L.J. 127, 132-36 (2023). respecting corporate separateness. This balanced approach addresses practical business realities while maintaining legal formalities.59 59 Irit Mevorach, “Cross-Border Insolvency of Enterprise Groups: The Choice of Law Challenge,” 9 Brooklyn J. Corp. Fin. & Com. L. 226, 231-38 (2014); Cross Border Insolvency Rules/Regulations Committee, “Report on Group Coordination in Multinational Insolvencies” 45-51 (2023).

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