Cross Border
Insolvency, 2nd Report submitted!
ILC submits 2nd
Cross Border Insolvency Report
A
major step to bring Indian Insolvency Law
on
a par with that of matured jurisdictions!
The
Insolvency Law Committee (ILC) constituted by the Ministry of Corporate Affairs
to recommend amendments to Insolvency and Bankruptcy Code of India, 2016, has
submitted its 2nd Report to the Government, which deals with cross border
insolvency. The Report was handed over to Shri Arun Jaitley, Minister of
Finance and Corporate Affairs by Corporate Affairs Secretary, Shri Injeti
Srinivas.
The
ILC has recommended the adoption of the UNCITRAL Model Law of Cross Border
Insolvency, 1997, as it provides for a comprehensive framework to deal with
cross border insolvency issues. The Committee has also recommended a few carve
outs to ensure that there is no inconsistency between the domestic insolvency
framework and the proposed Cross Border Insolvency Framework.
The
UNCITRAL Model Law has been adopted in as many as 44 countries and, therefore,
forms part of international best practices in dealing with cross border
insolvency issues. The advantages of the model law are the precedence given to
domestic proceedings and protection of public interest. The other advantages
include greater confidence generation among foreign investors, adequate
flexibility for seamless integration with the domestic Insolvency Law and a
robust mechanism for international cooperation.
The
necessity of having Cross Border Insolvency Framework under the Insolvency and
Bankruptcy Code arises from the fact that many Indian companies have a global
footprint and many foreign companies have presence in multiple countries
including India.
Although
the proposed Framework for Cross Border Insolvency will enable us to deal with
Indian companies having foreign assets and vice versa, it still does not
provide for a framework for dealing with enterprise groups, which is still work
in progress with UNCITRAL and other international bodies.
The
inclusion of the Cross Border Insolvency Chapter in the Insolvency and
Bankruptcy Code of India, 2016, will be a major step forward and will bring
Indian Insolvency Law on a par with that of matured jurisdictions.
Key:
Insolvency and Bankruptcy, Cross Border Insolvency, UNCITRAL Model