Cross-Border Insolvency in India – Emerging Trends.
- March 29, 2026
Globalization has really changed the way businesses work. Indian companies now have offices and assets all over the world, and foreign companies are just as invested here in India. So, when one of these companies runs into trouble like insolvency it’s not just a local problem anymore. Suddenly, courts and professionals in different countries have to get involved. That’s where cross border insolvency comes in.
When we talk about cross border insolvency, we mean situations where the person or company in debt, their creditors, or their assets are spread out across several countries. India’s laws are slowly catching up to deal with these complicated cases. Let’s break down what cross border insolvency is, how Indian law tackles it, and the latest trends.
What is Cross Border Insolvency?
Basically, cross border insolvency pops up when:
- A company’s assets are scattered in more than one country.
- Creditors are based in different places around the globe.
- Courts in different countries are handling insolvency cases for the same company.
So, you end up needing judges, insolvency experts, and legal systems from different countries to work together.
Why Does India Need a Cross Border Insolvency Framework?
There’s no getting around it multinational companies are everywhere now. There’s more foreign money flowing in, and creditors want to know their interests are protected no matter where a company operates. Without a proper framework, insolvency cases just drag on and get messy. You risk conflicting court decisions, and it’s hard to sort anything out quickly or fairly.
The Legal Situation in India
Right now, India doesn’t have a full-fledged law for cross border insolvency. The Insolvency and Bankruptcy Code (IBC) from 2016 touches on the issue, but only in a limited way.
Sections 234 and 235 of the IBC
These two sections are India’s first steps toward handling cross border cases:
- Section 234 lets the government sign agreements with other countries so IBC rules can work across borders.
- Section 235 allows Indian courts to ask foreign courts for help in insolvency matters.
It’s a start, but these measures aren’t enough for really tricky cases.
UNCITRAL Model Law on Cross Border Insolvency
On the world stage, the UNCITRAL Model Law is the gold standard for these situations. It’s all about making things smoother:
- Foreign insolvency reps can approach local courts.
- Courts can officially recognize insolvency cases started abroad.
- There’s active cooperation between courts and professionals.
- If two countries are running insolvency cases at the same time, they coordinate.
A lot of countries have already adopted this model.
India’s Take on the Model Law
India plans to bring in the UNCITRAL Model Law, but with some tweaks for the local context. Here’s what’s on the table:
- Recognizing both main and secondary foreign insolvency cases.
- Making it easier for Indian and foreign courts to work together.
- Making sure Indian public interests are protected.
- Building in safeguards for Indian creditors.
It’s clear India wants to stay in step with global standards.
How Indian Courts Are Shaping Cross Border Insolvency
The courts here are actually leading the way. Two cases stand out:
1. Jet Airways
Jet Airways had insolvency cases running in both India and the Netherlands. At first, India’s NCLT didn’t want to recognize the Dutch case. But later, the two countries worked out a cooperation protocol and ran parallel proceedings together. This was a first for India real, on-the-ground cross border coordination.
2. Videocon Group
Videocon had assets and creditors all over the place. The courts consolidated everything and took all the international factors into account. They managed to keep things balanced, which really showed why India needs a unified approach.
What’s changing? Quite a bit:
- Courts are more willing to recognize foreign insolvency cases, share information, and coordinate.
- Insolvency protocols are being set up to spell out how countries will cooperate and avoid stepping on each other’s toes.
- Foreign creditors are no longer sitting on the sidelines they’re filing claims, taking part in meetings, and getting their lawyers involved.
- At the policy level, the government’s looking at adopting the Model Law, making rules clearer, and ensuring local interests are protected.
Challenges Still Ahead
It’s not all smooth sailing. India still needs a comprehensive law, and there are plenty of jurisdictional clashes, differences in laws, and hurdles with enforcement. Local creditors also need protection. These are big issues, and clear legislation is the only way forward.
Role of Insolvency Professionals
In cross border cases, insolvency professionals play a crucial role by:
- Managing assets across jurisdictions
- Coordinating with foreign representatives
- Ensuring compliance with multiple laws
- Protecting creditor interests
Their expertise is essential for successful resolution.
Benefits of Effective Cross Border Insolvency Regime
- Faster resolution of insolvency
- Higher recovery for creditors
- Increased foreign investment confidence
- Reduced litigation costs
- Improved ease of doing business
A strong framework strengthens economic stability.
Future Outlook
India is steadily moving towards a structured cross border insolvency regime. Adoption of the UNCITRAL Model Law will significantly improve predictability and efficiency. With increasing global trade, cross border insolvency will become more common, making reforms inevitable.
Conclusion
Cross border insolvency is an emerging and critical area of insolvency law in India. While the Insolvency and Bankruptcy Code provides limited mechanisms, judicial developments and policy initiatives indicate a positive direction. Adoption of an international framework and improved cooperation will help India effectively handle complex multinational insolvency cases.
For legal guidance in insolvency matters, corporate restructuring, and cross border insolvency issues, consultation with Advocate Noor Yaqoob Shaikh can provide practical and informed assistance.