Insolvency Board to consider cross-border norms

MUMBAI: India is likely to consider expanding its bankruptcy law to include cross-border insolvency, which helps lenders tap defaulters’ assets overseas, as a top panel at the Insolvency and Bankruptcy Board of India (IBBI) meets Thursday to help strengthen the framework dedicated toward recovering bad loans.

“Cross-border insolvency is on top of the agenda. The authorities are keen to make that happen as there is no provision under the Insolvency and Bankruptcy Code (IBC) for it,” an executive privy to the matter told ET. The meeting of the Insolvency Law Committee will be chaired by the Corporate Affairs secretary.

MS Shahoo, chairman of IBBI, confimred that the subject is on the agenda, but declined to give further details.


Any addition to the IBC must be approved by Parliament.

The move is in line with the UNCITRAL Model Law, an international governance legislation on cross-border bankruptcy proceedings.

The UNCITRAL Model Law on Cross-Border Insolvency is the standard law issued by the secretariat of the United Nations Commission on International Trade Law about 20 years ago. It was aimed at assisting countries regulating corporate insolvency and managing companies that have assets or creditors in more than one country.

For example, if a company is admitted for insolvency, lenders empowered with cross-border insolvency can move to tap the company’s overseas assets.

The 14-member panel, which was set up to suggest ways of improving the implementation of the IBC, will also discuss the bankruptcy framework for small and medium companies (SMEs).

ET reported earlier that the government may consider giving SMEs different treatment under the IBC since they usually have a limited number of buyers and rely largely on promoters for a resolution.

The committee will explore the possibility of any exemption for such companies, allowing promoters to bid for their assets under insolvency proceedings.