Bridging Boundaries: An In-depth Exploration of Cross-Border Insolvency Evolvement in India
1. Pioneering a Paradigm: Unveiling the Cross-Border Insolvency Framework in India
Insolvency and Bankruptcy Code, 2016: A Milestone
The Insolvency and Bankruptcy Code, 2016 (IBC) serves as the cornerstone of India’s insolvency and bankruptcy landscape, orchestrating a harmonized process to address insolvency issues within the nation. However, the code initially overlooked the intricate domain of cross-border insolvency, thus leaving a void in addressing cases where debtors have assets or creditors sprawling across different jurisdictions1, 2.
2. Steering Towards Global Synchronization: The Mission of ILC and CBIRC
Assembling the Expertise: Formation of ILC
The Ministry of Corporate Affairs (MCA) of India took a decisive step on 16 November 2017 by constituting the Insolvency Law Committee (ILC) to re-evaluate the fragmented and complex cross-border insolvency framework in India and bring it at par with global standards3.
Drafting the Blueprint: The ILC Report and Draft Part Z
In October 2018, the ILC submitted its report, which incorporated ‘Draft Part Z’. This draft delineated a comprehensive framework to navigate cross-border insolvency challenges, covering aspects like foreign requests for access to domestic courts and recognition of foreign insolvency proceedings in India4.
CBIRC: The Torchbearer of Reform
The MCA further propelled the momentum by constituting the Cross-Border Insolvency Rules and Regulations Committee (CBIRC) in January 2020, aiming to frame rules and regulations for implementing Part Z4, 5.
3. Navigating a Complex Terrain: The Hurdles in Cross-Border Insolvency
The Jurisdictional Maze
Cross-border insolvency ushers in complexities due to simultaneous proceedings in multiple jurisdictions, challenging the enforcement and recognition of insolvency proceedings and judgments across borders6, 7, 8.
4. Progressing with Prudence: Treading the Path of Cross-Border Insolvency Reform
Public Engagement: Gauging the Pulse
The CBIRC report, submitted in June 2020, was opened for public comments in November 2021 to evaluate the potential implications of the proposed law on individuals’ rights. The feedback collected till 15 December 2021 is envisioned to refine Draft Part Z before it morphs into law9.
Towards a Group Insolvency Framework
The CBIRC-II further advocated for a voluntary, flexible, and enabling group insolvency framework to be phased into the IBC 2016, as per its report dated 10 December 2021 10, 11.
5. Envisioning a Cohesive Insolvency Ecosystem: Progress and Future Trajectories
Global Resonance: Aligning with International Best Practices
The endeavors of ILC and CBIRC echo India’s aspiration to foster a robust cross-border insolvency regime, aligning with the UNCITRAL Model Law and facilitating effective communication and cooperation between Indian and foreign courts and insolvency professionals12.
India’s journey in refining its cross-border insolvency framework is a testament to its resolve towards creating a conducive environment for global commercial interactions. The meticulous efforts of ILC and CBIRC, coupled with active public engagement, are steering India closer to a coherent and internationally resonant cross-border insolvency regime. The path ahead, although laden with complexities, holds the promise of fostering a harmonized insolvency landscape that resonates with global legal standards, thus bolstering India’s position in the global insolvency domain.