Report of the Insolvency Law Committee on Cross-Border Insolvency
Designing a framework for facilitating cross-border insolvency resolutions under the Code
Cross border insolvency law deals with coordinating insolvency proceedings in different jurisdictions in relation to the same debtor. Due to increasing globalisation, cross border insolvencies have been very common in the last few years. The original provisions on cross-border insolvency under the Insolvency and Bankruptcy Code, 2016 (IBC) were very basic. The Bankruptcy Law Reform Committee that proposed the IBC had argued that the cross-border insolvency system should be developed only after effective implementation of the domestic system.
A year after the IBC’s enactment, the Ministry of Corporate Affairs constituted the Insolvency Law Committee to make recommendations regarding issues related to the insolvency resolution and liquidation of corporate persons under the IBC. The Committee noted that the current provisions of the IBC are insufficient to efficiently deal with cross border insolvency matters. To address this, it recommended that amendments be made to provide a comprehensive framework for handling cross-border insolvency matters.
An analysis of international best practices suggests that the UNCITRAL Model Law on Cross Border Insolvency (‘Model Law’) has emerged as a widely accepted legal framework to deal with cross-border insolvency issues globally. The Model Law is an international instrument that countries may adopt into their domestic law, with or without modifications, to deal with their cross-border insolvency matters. The Committee noted that the Model Law is a flexible instrument that promotes cooperation amongst countries while also giving protections to domestic creditors, and that its adoption would aid in ensuring certainty in the law and increasing foreign investment. Thus, in its report, the Committee submitted a draft framework for dealing with cross border insolvency that follows the Model Law, with appropriate modifications. Once implemented, this framework would go a long way in aligning IBC with international best practices on cross-border insolvency law.The Committee’s report on Cross Border Insolvency was released in October, 2018. It also included a draft framework of the law.
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About the Authors
Vedika was a Senior Resident Fellow and led Vidhi’s work in the field of Competition Law. She also led projects commissioned by various ministries in diverse areas including domestic and cross-border insolvency and company law for the Corporate Law and Financial Regulation team at Vidhi. Vedika completed her B.A. LL.B. (Hons.) from Gujarat National Law University in 2011 and an MCL from University of Cambridge in 2014.
Aishwarya was a Senior Resident Fellow working in the area of Corporate Law and Financial Regulation. At Vidhi, she has primarily worked on engaged/commissioned projects from various ministries, statutory authorities and regulators, where she provides legal research and drafting support at various stages of law-making. Aishwarya works on a variety of legal and regulatory matters and allied issues in public policy, chiefly related to insolvency laws, competition laws and corporate governance laws. Aishwarya graduated with a B.A. LL.B (Hons.) from Jindal Global Law School (JGLS) in 2017. During her time there she worked on two human rights reports and attended specialised courses in Advanced Corporate Law and Competition Law. She has also interned under Senior Advocate Ramji Srinivasan, in Avantha Holdings Ltd. and in leading law firms.
Shreya is a Senior Resident Fellow, and leads the work at the intersection of law, finance and development at Vidhi. She is currently focusing on independent research work relating to financial inclusion, tech and corporate governance. She has worked on several engaged projects with the International Financial Services Centres Authority, Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India. Shreya completed her LLB from National Law University, Jodhpur in 2012 and LLM from Queen Mary, London on a Chevening scholarship in 2019. She also worked with the European Bank for Reconstruction and Development, London in 2019. Prior to joining Vidhi in 2014, she worked as an Associate at Luthra & Luthra Law Offices, New Delhi.
Debanshu is one of Vidhi’s Co-Founders. He has over a decade of experience in commercial laws and the financial sector and has advised the Government of India on several legislative projects in this space. He was instrumental in advising the Government on the design and drafting of the Insolvency and Bankruptcy Code and its subsequent implementation. He has developed and curated Vidhi’s work on insolvency law, corporate law, financial regulation, and competition law and conceptualized its Bankruptcy Research Program. He has served as a member of a Government-appointed committee for operationalizing the National Company Law Tribunal and deposed before two Parliamentary committees examining financial sector legislation. He has also worked as a teaching fellow at Harvard Law School. He is an alumnus of the Harvard Law School, the University of Oxford, and Hidayatullah National Law University. He attended Harvard as a Fulbright Scholar and was awarded the Irving Oberman Memorial Prize in Bankruptcy and the Dean’s scholar prize in Corporations. He was also awarded a Distinction for his graduate studies at Oxford. In 2017, he was selected for NYU School of Law’s Hauser Global Scholarship, which he waived. His academic work has been published in peer-reviewed journals and an edited book published by Cambridge University Press, New York. He has been consulted by and mentioned in global business publications, such as IFR Asia and The Economist. Earlier, Debanshu practiced as an M&A and regulatory lawyer with AZB & Partners at its Mumbai and New Delhi offices.
