THE CROSS-BORDER CAVITY OF THE INSOLVENCY & BANKRUPTCY CODE, 2016

Abstract

With globalization, there has been widespread international trade. In modern globalised world, a corporate is allowed to grow domestically and internationally. In case of Insolvency, the problem arises in international scenario and not at domestic level due to change in laws and jurisdiction. When a corporation crosses boundaries, the applicability of domestic law is out of scope and in that case the nations involved have to carve out the relevant law. The 2016 Insolvency and Bankruptcy Act (IBC), which offers a consolidated framework for the insolvency of companies, limited and unlimited liability partnerships, and individuals. But this cross-border aspect of insolvency law remains unclear in India as IBC does not properly deal with these issues. An attempt was made in this direction by inserting two provisions in IBC at last minute to resolve cross-border issues viz. “Agreement with foreign countries” and “Letter of Request to a country outside India in certain cases”, but these provisions proved out to be inadequate and of little assistance to institutions dealing with cross-border insolvency. The Insolvency Law Committee constituted by the Ministry of Corporate Affairs, recently came out with recommendations on international insolvency. It has suggested implementing the 1997 UNCITRAL Model Law on Cross-Border Insolvency. This paper will outline the general principles of the UNCITRAL Model Law and analyse the difficulties of cross-border insolvency in the Indian context.