Cross-Border Insolvency Challenges in India

• India faced financial failures and cross-border commerce issues under the British Raj.

• The Indian Insolvency Act of 1848 was the first insolvency law, replaced by the Presidency-Towns Insolvency Act 1909 and the Provincial Insolvency Act, 1920.

• These laws failed to address cross-border insolvencies, creating a legal gap.

• Post-Independence, these laws remained unchanged, necessitating a comprehensive insolvency law.

• The UNCITRAL Model Law on Cross-Border Insolvency, 1997 was recommended.

• The Bankruptcy Law Reform Committee drafted the Insolvency and Bankruptcy Code (IBC) Bill, focusing on domestic insolvencies.

• The State Bank of India vs Jet Airways (India) Limited case highlighted the absence of reciprocal arrangements for cross-border insolvency resolution.

• The National Company Law Tribunal (NCLT) identified these issues and their non-notification by the central government.

• The Ministry of Corporate Affairs constituted expert committees to adopt the UNCITRAL Model Law on Cross-Border Insolvency.

• The NCLAT proposed a “cross-border insolvency protocol.”

• Recommendations include adopting the UNCITRAL Model Law, reforming communication methods, and expanding NCLT powers.