The situation of Cross-Border Insolvency arisen when debtors and creditors are spread across the various jurisdiction, creating challenges for effective insolvency dispute resolution. For cross-border insolvency, India has Insolvency and Bankruptcy Code, 2016 (IBC) which provides a consolidated domestic framework, it has only two provisions under Section 234 and Section 235.
The UNCITRAL Model Law on Cross-Border Insolvency, adopted on 30th May, 1997 offers key element such as access, recognition, relief, cooperation. Other jurisdictions including the U.S., U.K., Singapore, and South Korea have adopted it to harmonize insolvency proceedings and protect stakeholders across borders.
In India, judicial precedents such as Jet Airways v. SBI (2019), Ruchi Soya v. Union of India (2021), and SBI v. Kingfisher Airlines (2017) have underscored the need of stringent laws for cross-border cooperation. Responding to this, the Insolvency Law Committee (ILC) in 2018 recommended the adoption of the Model Law through a proposed Draft Part Z in the IBC, extending its application to corporate debtors (including foreign entities) while refining Sections 234–235.
Cross-Border Insolvency has become one of the key challenges across the jurisdiction. Currently, India’s cross-border insolvency framework for resolving Insolvency are not strictly implemented. India should participate in the UNCITRAL working groups to deal with the cross-border insolvency issues. This will help the India to participate in international practice and build global standards for cross-border insolvency cooperation.
