Cross Border Insolvency Mechanism in India: The Need to Adopt UNCITRAL Model Law
Volume IV, Issue I, 2021
Globalization has led to growth of multinational corporations with creditors and assets held across countries. Therefore, actions of a multinational corporation may have effects spread across the world with domestic boundaries of the countries virtually being non-existent. Therefore, there is a need to adopt globally accepted basic procedural standards involved in cross border insolvency situations to provide greater certainty in international trade. The Indian legal regime in its current form fails to provide a concrete mechanism to deal with such situations. The need to bring in a law along the lines of globally accepted UNCITRAL Model Law is highlighted much more now in the times of the Corona virus pandemic as many businesses are financially strained due to disrupted supply lines as a result of the ‘Lockdown’. The Insolvency Law Committee has suggested the adoption of Model Law but no action has been taken yet to accept its report. This paper aims at explaining how minor amendments to the Model Law can build a full proof system of cross border insolvency mechanism to deal with the inadequacies of the current Indian legal regime.