CROSS BORDER INSOLVENCY

Recommendations by ILC:

• India should adopt the United Nations Commission on International Trade Law (UNCITRAL) Model Law of Cross Border Insolvency, 1997, as it provides for a comprehensive framework to deal with cross-border insolvency issues.
  • The UNCITRAL Model Law has been adopted in 44 countries and, therefore, forms part of international best practices in dealing with cross border insolvency issues.
    
    
  
  
  
• It also recommended a few carve-outs to ensure that there is no inconsistency between the domestic insolvency framework and the proposed cross border insolvency framework.
  
  

Comment:

• The necessity of having a cross-border insolvency framework under the IBC arises from the fact that many Indian companies have a global footprint and many foreign companies have a presence in multiple countries, including India.
  
  
• The inclusion of the Cross-Border Insolvency Chapter in the IBC will be a major step forward and will bring Indian Insolvency Law on a par with that of matured jurisdictions.
  
  
• The advantages of the model law are the precedence given to domestic proceedings and protection of public interest.
  
  
• The other advantages include greater confidence generation among foreign investors, adequate flexibility for seamless integration with the domestic Insolvency Law and a robust mechanism for international cooperation.