Cross-Border Insolvency: An Indian Paradigm

The world is a global village with corporation no longer bound to their “native” to do business. But risk remains an intrinsic factor of all businesses and there are several that fail, in their wake they might stop their operations but leave their debts behind. In early industrial era, such debts were dealt on a national level. However, in the era of globalization, such solutions are no longer feasible. Today, countries are struggling with balancing the interest of nations with corporations to stay ahead in the economic race. Insolvency is a sensitive matter for both the corporation and the state which has to facilitate such process but within the globalized world there is a need for globalized insolvency process. On an international level, an endeavour in the form of UNICITRAL Model Law has been made which multiple nations have accepted, other nations have made relevant changes to their domestic laws to facilitate ‘cross-border’ insolvency but India stays on the backfoot with such changes. While Insolvency and Bankruptcy Code, 2016 provides for provisions that may facilitate cross-border insolvency, these provisions have yet to see real application. Stakeholders and research groups have come up with solutions with Insolvency Law Committee seeking implementation of ‘Draft Part Z’ but all of this remains theoretical. This paper examines the concept of ‘Cross-border Insolvency’ in light of governing judicial and administrative principles and draws a comparative analysis to accurately identify India’s stance on the issue along with potential suggestions.