Cross-Border Insolvency Under IBC explained: this guide covers what Cross-Border Insolvency Under IBC means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
As Indian companies increasingly operate internationally and foreign companies conduct business in India, cross-border insolvency has become a critical legal challenge. The IBC 2016 has limited provisions, and India is moving towards adopting the UNCITRAL Model Law on Cross-Border Insolvency.
Current Framework: Sections 234-235 IBC
Section 234 — Bilateral Agreements
Enables the Central Government to enter bilateral treaties or agreements with other countries for:
- Enforcement of provisions of IBC in those countries
- Application of those countries insolvency laws to Indian proceedings
- Cooperation between insolvency authorities
Limitation: No bilateral agreements have been entered into as of 2025. This creates a complete vacuum for practical cross-border insolvency.
Section 235 — Letters of Request
Adjudicating Authority (NCLT) can issue letters of request to competent courts in foreign countries requesting assistance in cross-border insolvency proceedings — applying IBC principles. Used in practice but recognition by foreign courts is uncertain without treaties.
The UNCITRAL Model Law Framework (Proposed)
The UNCITRAL Model Law on Cross-Border Insolvency (1997) has been adopted by 50+ countries including USA (Chapter 15), UK, Australia, South Korea, and Japan. Key provisions:
Access for Foreign Representatives
Foreign insolvency representatives (RP equivalents) can directly access domestic courts to participate in local proceedings of the same debtor.
Recognition of Foreign Proceedings
| Type | Definition | Effect on Recognition |
|---|---|---|
| Foreign Main Proceeding | Proceeding in country where debtor has COMI | Automatic stay/moratorium in recognizing country |
| Foreign Non-Main Proceeding | Proceeding in country where debtor has an establishment | Discretionary relief only |
Cooperation with Foreign Courts
Courts and insolvency practitioners of different countries can communicate and cooperate directly — sharing information, coordinating proceedings, cross-border protocols.
Jet Airways Cross-Border Case (2019-2020)
Jet Airways is India's landmark cross-border insolvency case:
- Jet Airways entered CIRP in June 2019 at NCLT Mumbai
- Dutch court had appointed provisional insolvency administrators for Jet Netherlands
- NCLT Mumbai issued letter of request to Dutch court
- Dutch and Indian courts conducted joint hearing (protocol) — India first cross-border judicial cooperation
- Lessons: absence of UNCITRAL Model Law caused delays and uncertainty in coordination
IBC Amendment Bill 2022 — Proposed Changes
The Amendment Bill proposed inserting Part ZA (Chapter IVA) with provisions based on UNCITRAL Model Law:
- COMI determination for debtors
- Mechanism for recognition of foreign proceedings
- Relief provisions (automatic stay or discretionary)
- Cooperation with foreign courts
- Concurrent proceedings (same debtor in multiple countries)
As of May 2025: Bill passed Lok Sabha but pending Rajya Sabha approval and enactment.
Practical Challenges Today
- No automatic moratorium in India against foreign creditors when CIRP is initiated
- Indian RP cannot access foreign assets of debtor without bilateral agreements
- Foreign creditors uncertain about their rights in Indian CIRP — they participate as "foreign operational/financial creditors" with same rights under existing IBC
- Asset stripping risk: promoters may move assets offshore before CIRP commences
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