Post by Himani Kapoor

If India already has provisions for cross-border insolvency under the IBC, why is there still a demand for adopting the UNCITRAL Model Law? The answer lies in Sections 234 and 235 of the Insolvency and Bankruptcy Code, 2016. At first glance, these provisions appear to provide a mechanism for cross-border insolvency. However, in practice, their effectiveness is limited. Section 234, empowers the Central Government to enter into reciprocal agreements with foreign countries for enforcing the provisions of the IBC. Section 235, enables the Resolution Professional, Liquidator, or Bankruptcy Trustee to seek assistance from an Indian adjudicating authority, which may issue a letter of request to a court or authority in a country with which such a reciprocal arrangement exists. The challenge? These provisions are contingent upon bilateral agreements between India and other jurisdictions. Without such agreements, the mechanism under Sections 234 and 235 remains largely inoperative. This is where the UNCITRAL Model Law on Cross-Border Insolvency offers a different approach. Instead of relying on multiple bilateral treaties, it establishes a uniform framework that enables: • Recognition of foreign insolvency proceedings. • Cooperation between domestic and foreign courts. • Coordination between insolvency professionals across jurisdictions. • Greater certainty for creditors and investors. As Indian companies increasingly operate across borders and foreign creditors become more involved in Indian insolvency proceedings, the need for an efficient and predictable cross-border insolvency framework becomes more pressing. Perhaps the real question is not whether India has provisions for cross-border insolvency but whether those provisions are adequate for the realities of global commerce. Do you think India's existing framework under Sections 234 and 235 is sufficient, or is it time to adopt the UNCITRAL Model Law? #IBC #UNCITRAL #CrossBorderInsolvency #CorporateLaw #Insolvency #LegalInsights #BusinessLaw #NCLT