India’s aspirations for a robust cross-border insolvency framework may remain a work in progress for sometime, a top Corporate Affairs Ministry (MCA) official has indicated. However, MCA is optimistic about its eventual implementation in the country.

 “Cross-border framework is something whose time will come; it has not yet come. It will come,” Anita Shah Akella, Joint Secretary, MCA, said at the 8th Foundation Day of the Indian Institute of Insolvency Professionals of ICAI (IIIPI) in the capital.

Her remarks are significant as Centre was widely expected to include provisions related to ‘cross border insolvency framework’ as part of Bill to amend the Insolvency and Bankruptcy Code 2016. Indications are that the IBC amendment Bill may not get introduced in the ongoing Winter Session. It is not part of list of Bills announced by the Government ahead of the commencement of Winter Session.

 A cross-border insolvency framework is essential for handling bankruptcy cases involving multinational corporations with operations and creditors spanning different jurisdictions. 

It facilitates efficient resolution of claims, provides legal certainty to creditors, and ensures fair distribution of assets. 

Currently, India’s Insolvency and Bankruptcy Code (IBC), despite its achievements in streamlining domestic insolvency processes, lacks provisions to address cross-border insolvency comprehensively.

Procedural challenges

Experts believe that India’s delay in adopting a cross-border insolvency framework stems from the legal and procedural challenges involved. They feel that harmonising the domestic insolvency process with international laws under frameworks like the United Nations Commission on International Trade Law (UNCITRAL) Model Law requires careful calibration. 

Issues such as jurisdictional conflicts, recognition of foreign insolvency proceedings, and asset tracing across borders need clarity. Additionally, concerns about safeguarding domestic creditors’ interests and ensuring that the framework aligns with India’s economic realities have slowed progress.

The need for such a framework, however, is pressing. With India emerging as a global investment hub, multinational corporations often find themselves entangled in insolvency proceedings involving entities in other jurisdictions. Without a streamlined mechanism, resolving such cases becomes inefficient and costly.

As global trade and investments deepen, the urgency for a cross-border insolvency regime is expected to grow, making it a key reform on India’s economic agenda, experts said. 

Specific rules for NCLT

Meanwhile, Akella said that MCA is in the process of framing specific Rules for National Company Law Tribunal ( NCLT) as an adjudicating authority. The Rules are expected to help get things faster in NCLT functioning.

The integrated portal for IBC announced in the Budget is expected to go live in the next 18 months, she added. 

MCA is also soon expected to introduce special dedicated NCLT Benches for Company law matters, she said. 

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