This article is written by Priyanka Mandhani, a qualified Corporate Lawyer and a Company Secretary, and the Founder of Juris Summit. She specialises in corporate law, compliance and contract advisory for startups and businesses across jurisdictions. With experience in Indian and US legal systems, her work focuses on aligning legal strategy with commercial outcomes.
Getting started
Nowadays, Indian companies are not only functioning in India but also beyond borders. But this international expansion sometimes creates difficulties in tough times. It gets quite tough when companies get into any financial trouble, and the assets are scattered across multiple countries, and every country has its own legal system.
What happens in this case? The creditors, employees, and investors sitting in a dozen different countries are going to be affected by this. This is a reality of cross-border insolvency and is challenging. The company that manages to overcome this situation wins the investors’ trust. But who fails? This is like losing a race in the global market.
In this global race, is India capable enough to handle these types of mess? Are the Indian law (Indian Bankruptcy Code 2016) and courts ready to handle the disputes that involve cross-border assets and creditors? Or to meet the international standards, is there a need for a strategy change?
Let’s find out.
Understanding the cross-border gap in the IBC 2016
Aspirations without any Implementation
What came with IBC when it was introduced in 2016?
An order and certainty to handle domestic insolvency cases. But there was a legislative gap in the cross-border insolvency part.
Yes, it does mention international cooperation under Sections 234 and 235. But these are more like wishful promises than actual working mechanisms. One authorises the central government to make an agreement with foreign countries to enforce the IBC there (S. 234). And the other one allows the resolution professionals to receive letters of request from foreign courts. This assists in dealing with the overseas assets of the corporate debtors (S. 235).
Looks fine on the paper. But in reality, no bilateral agreement exists.
So the fact is that these provisions just exist, but are of no practical use. When any company with foreign investors and assets abroad is in trouble, then the resolution professionals and courts find it difficult to work without any practical tools.
The absence of COMI and its repercussions
One of the trickiest parts is that we lack a clear and formal concept of the Centre of Main Interest (COMI). This works like an anchor that decides which country has the primary jurisdiction in such cases. So COMI is a big deal in cross-border bankruptcy systems.
But there is no statutory definition of COMI in India. No clear rules and no settled interpretation. So our courts are left navigating uncharted water when any case comes up. This often results in competing claims of jurisdiction and legal confusion.
What is the fallout?
When there are multiple countries running their own insolvency process at the same time, it results in higher litigation costs, delays and unpredictable results.
Jet Airways: a groundbreaking protocol
This issue didn’t just stay within our borders, and quickly turned into a full-blown cross-border legal battle in 2019. The proceedings were running in India and the Netherlands simultaneously.
But what actually happened?
To start the bankruptcy proceedings of Jet’s overseas operations, the creditors approached the Dutch court. While in India, the domestic Corporate Insolvency Resolution Process (CIRP) was being managed by the National Company Law Tribunal (NCLT).
The powers of the Dutch bankruptcy trustee were not recognised by the NCLT. It actually refused to recognise their powers. It pointed out that IBC has no clear legal provisions that formally allow it to recognise foreign proceedings or representatives.
NCLAT’s Landmark judgement
But then came a historical twist.
NCLT’s landmark judgement was a game-changer. It was the very first time a cross-border insolvency process was approved that allowed the Indian resolution professional and the Dutch trustee to work together.
The Sections we discussed above, S. 234 and S. 235, are more aspirational than functional. Also, India hasn’t adopted the UNCITRAL Model Law on cross-border insolvency. This gap was filled by the sheer level of creativity of NCLT.
Here is what it did.
India was recognised as the COMI by the Tribunal while granting partial recognition to Dutch proceedings as a “non-main” proceeding. In simple words, it means that Indian proceedings were primary, but Dutch proceedings had legal standing.
It was the very first time in the legal history of India that a foreign insolvency administrator’s jurisdiction was recognised within an Indian insolvency case.
Hon’ble Supreme Court’s order
The aftermath was not that smooth. While the case showed that judicial diplomacy can be used by the Indian courts to make cross-border insolvency work, even without a proper legal framework. But it was risky to rely completely on judicial patchwork instead of solid legislation.
The so-called ‘Jet Protocol’ became a symbol of what social pragmatism could achieve in a globalised financial world. But the revival plan fell apart soon. The Jalan-Kalrock Consortium failed to meet the key conditions. This was picked to rescue the jet.
Despite repeated extensions, the most-awaited first tranche payment of ₹ 350 crore never came. The consortium also attempted to alter its performance guarantee, rasing serious concerns about intent.
Pointing out the repeated defaults, bad faith and abuse of procedural flexibility, the Court ordered liquidation on November 7th, 2024. The Court reiterated that IBC’s purpose is deliver speedy resolution and maximise value.
Using its special power under Article 142, the Court also recommended organisational changes, CoCs need to put decision reasons on record, an oversight committee shall enforce binding guidelines of CoC behaviour, NCLT orders should have implementation milestones spelt out, and tribunal infrastructure needs to be immediately strengthened with additional members and technological advancements to avoid future delays.
Group insolvency & international assets: Videocon & others
The approach of India regarding cross-border bankruptcy should also pay special attention when the discussion is regarding group insolvency, as there are many businesses which are operating across different countries. There is a famous example of a case, State Bank of India v. Videocon Industries Ltd (2018), in this case the first substantive consolidation allowance was provided by the court under the Insolvency and Bankruptcy Code (IBC). This judgment helped in creating a judicial pathway for group insolvency long before India had introduced a legal framework for that.
The NCLT decision
It was requested by a group of lenders for the merger of 13 Videocon Group companies, where each company was undergoing its insolvency process. These companies were all linked through shared liabilities, common promoters and strong independence. It was observed by the NCLT that these are not separate businesses that are running different and separate CIRPs, and such a thing would create confusion, make the process inefficient and lower the value.
Keeping this issue in mind, the tribunal ordered a combined CIRP. The tribunal directed that there should be the appointment of one common Committee of Creditors (CoC), one Resolution Professional (RP), and the merging of liabilities and assets of all the companies. Most important to be kept in mind is that the NCLT also included gas assets as well as Videocon’s foreign oil, which was held in overseas subsidiaries, which is a part of the consolidated debtor’s estate.
Challenges
This move, while aimed at value maximisation, raised profound cross-border legal challenges. Can Indian insolvency orders be enforced abroad, particularly in jurisdictions with their own insolvency frameworks and property regimes? Without bilateral treaties (under S. 234 and S. 235) or a codified cross-border mechanism, such orders have limited extraterritorial enforceability.
Globally, courts have addressed similar issues. In the US, Courts allow consolidation when entities operate as a unified whole, as in re Bonham, Genesis Health Ventures, and Owens Corning. The core principle: economic reality must prevail over corporate form when separateness is abused or inefficient.
Foreign creditors under India’s insolvency regime: Progress or tokenism?
Statutory inclusion of creditors under the IBC
Inclusion of foreign creditors under the IBC regime is a development, but far from universal. The IBC defines a “person” under Section 3(23) to explicitly include those “resident outside India,” and this definition carries through into the classification of both financial and operational creditors under Sections 5(7) and 5(20). In principle, this implies that foreign creditors ought to have access to the same recourse as their Indian counterparts. But principle and practice are not always so easy to bridge.
The Macquerie Bank ruling: Allowing foreign creditors into the market
The Apex court in the Macquarie Bank v. Shilpi Cable Technologies (2018) ruling cleared up a major hurdle for foreign creditors. The major issue was whether a certificate of an Indian-recognised “financial institution” is to be provided by a creditor under S. 9 (3) of IBC.
It was a yes by the NCLT and NCLAT. Macquarie, a Singaporean bank, was disqualified for lacking the certificate after issuing the demand letter and starting CIRP. But the Apex Court had a more practical view. The requirement was not mandatory but directory, as the Court ruled. It made sure that the international creditors are not blocked because of the technicalities.
The bigger problem hasn’t gone away. Foreign stakeholders are still stuck in the procedural obstacle because the IBC does not automatically recognise foreign insolvency judgements. With no bilateral treaties and no comprehensive cross-border framework, everything ends up depending on ad hoc court discretion.
Cross-border fallout from the Bhushan Power & Steel case
In Kalyani Transco v. Bhushan Power & Steel (2025), the Supreme Court overturned JSW Steel’s court-approved and completely implemented resolution plan for Bhushan Power due to major procedural irregularities. Despite the fact that the plan had been carried out over three years, including the injection of foreign money and payments to creditors, the Court ordered liquidation and the restoration of disbursed funds.
Impact on foreign investors and local markets
The transaction had numerous cross-border stakeholders and foreign finance mechanisms, making the decision highly unsettling for international investors.
Do you know the international reaction? Foreign investors have marked India as a “high-risk” jurisdiction for the enforcement of insolvency. Their fundamental anxiety is not about the substantive result but about the unpredictability of judicial intervention, long after a resolution plan is approved and implemented.
What has the Bhushan Power case uncovered? Even when stakeholders act as per the commercial and regulatory environment, failures due to resolution professionals or the CoC can retroactively deconstruct transactions.
Concerns surrounding institutional accountability
The absence of institutional accountability, more specifically for the function of adjudicating authorities and professionals engaged, overburdens the resolution applicants and creditors disproportionately.
Judicial unpredictability, particularly in the implementation of resolution plans that are fully executed, gravely erodes India’s reputation for credibility on cross-border insolvency issues. Reforms in law and regulation have to tackle this fault line so that the IBC comes to be a mechanism that not merely resolves distress efficiently but also generates confidence among global financial stakeholders.
What is stopping India from adopting UNCITRAL for cross-border insolvency?
Redundant approach to Internationalisation legal harmonisation
When it comes to adopting the UNCITRAL law on cross-border insolvency, India has been dragging its feet. A draft framework was recommended based on the Model Law by the Insolvency Law Committee in 2018. But years later, it is still sitting on the shelf. On the other hand, other countries like the USA, the UK and Singapore have already integrated the Model Law in their domestic system.
Why is India hesitant?
A lot of it comes because of the sovereignty concerns. The fear is that if we let the foreign courts or administrators in, then it might dilute the domestic control. Concerns are also related to the fact that India does not have reciprocal enforcement agreements with other countries yet.
But where companies are running in countries and capital is flowing easily across borders, these have started to look outdated. India needs to start aligning with international standards if it wants to position itself as a serious global financial hub, as it may not remain an option for long.
Dependence on reciprocal treaties that are non-operative in nature
India’s current mechanism is built based on S. 234 and S. 235. These Sections allow cooperation with foreign jurisdictions through reciprocal treaties, on paper. What is the actual problem? None of these treaties is actually in force today.
So what does this mean in practice?
Lots of uncertainty. There is no clear path for foreign creditors and insolvency professionals who want to participate in Indian proceedings.
This lack of a functional legal mechanism creates delays, confusion and risks. At a time when global confidence is critical, there is no reliable way for the foreign insolvency proceedings. India risks being seen as a difficult jurisdiction to do business.
Speculations surrounding India’s competitiveness as an investment location
Failure to have a globally accepted cross-border structure undermines India’s intentions to emerge as a capital competitive location. Conversely, embracing the Model Law would simplify foreign proceeding recognition, facilitate coordinated multinational resolutions, and enhance India’s international market credibility.
Reform here is not just legal tidying up it is vital to making it easier to do business and building India’s financial stability. While India invites foreign investment, it needs to prove that its laws are able to deal with cross-border distress with transparency and predictability.
Comparison with UK and US models
There is no formal recognition of foreign proceedings, and also no clear set of rules on who gets paid first. Concurrent liquidation in different countries ends up slicing updates into pieces and reducing overall recovery.
In contrast, the UK and the US have already adopted the UNCITRAL Law. Their systems provide creditors with uniform standards of recognition, automatic stays and strong judicial cooperation.
India, on the other hand, is still stuck with a patchwork approach. This does not provide the same assurances. IBC needs to evolve into a framework closer to the Model Law, that cuts down on multiple proceedings, brings transparency and grows investor confidence in these cases.
Until that happens, India’s regime will remain weak, eroding asset value and investor trust in an increasingly interconnected economy.
Recommendations and roadmap for reforms
Adopting the UNCITRAL model law via “Part Z” amendments
The regimen of cross-border insolvency in India is bogged down by ad hoc judicial solutions and unpredictability, discouraging international investors. To correct this, India needs to pass “Part Z” of the IBC to unambiguously adopt the UNCITRAL Model Law.
Creating Cross-Border Facilitation Offices
Legislation has to be complemented by bilateral treaties in the central jurisdictions (Singapore, UK, US) to ensure mutual recognition and enforcement of insolvency orders and coordinate concurrent proceedings- preventing asset fragmentation and creditor conflict like Jet Airways. Enacting these reforms needs a Cross-Border Facilitation Office(CFO) which would formulate best-practice procedures, have a registry of foreign proceedings with Indian connections, and act as a point of liaison for foreign fiduciaries.
Imbibing procedural discipline
Procedural discipline is also important. To prevent asset deterioration and stakeholder frustration, courts must enforce binding timeframes for foreign representative involvement, including defined dates for claim filing, relief applications, and document exchange. Judges, tribunal members, and practitioners require specialised training in comparative insolvency law, international negotiation, and asset recovery. The IBC, in collaboration with universities and organisations like INSOL, should offer certification courses, workshops, and mentorship.
A way forward
At the present time, India is in a very crucial stage, and the talk is regarding the strengthening of the insolvency system. It is seen that the domestic laws have been quickly developed, but the country is now also struggling to handle the cases which are related to cross-border. If India adopts the UNCITRAL Model Law through the proposed amendment, i.e, “Part Z” will help bring India with more than fifty leading jurisdictions, as well as provide relief in foreign proceedings and legal clarity which needed during recognition. Not only this, but when the country enters into a reciprocal agreement with important centres such as the US, UK and Singapore, such an agreement will ensure smooth coordination in the cross-border cases and mutual recognition of insolvency orders.
When a cross-border facilitation Office is set up within IBBI, then through this, it will help in bringing all expertise together, which makes the procedure even and uniform and also provides a single point of contact for all foreign representatives. When the timelines are clear for the foreign participants then it helps in ensuring smoother processes and also helps in improving skills which needed in handling large multinational restructurings.
Frequently asked questions (FAQS)
- Can any international creditor file for bankruptcy under IBC if he does not have any local counsel?
Yes, any international creditor can file for bankruptcy under IBC if he does not have any local counsel. In the judgment of Macquarie Bank v. Shilpi Cable Technologies Supreme Court said that foreign financial creditors will now be able to start a Corporate Insolvency Resolution Process (CIRP) in India without needing a local resolution expert.
- Can a legal practitioner outside India take part in an Indian CIRP directly?
Foreign practitioners cannot automatically appear at the moment; they have to wait for Section 235 letters of request, which can be given by Indian tribunals at their discretion. Foreign trustees have no recourse to reciprocal treaties or Model Law provisions and must apply for express permission of the courts to participate in a CIRP.
- What are the available remedies where a foreign creditor’s claim is accepted, but enforcement over assets abroad is needed?
Once a domestic judgment or order of liquidation in India is secured, foreign creditors have to depend upon mutual enforcement agreements or local laws within the jurisdiction of the asset. Without bilateral insolvency arrangements, they typically encounter further litigation for the acknowledgement and enforcement of Indian orders abroad, which adds time and expense.
