An Analytical Study of Corporate Insolvency Resolution Procedure in India with Special Reference to Cross-Border Insolvency Issues

Abstract

The Insolvency and Bankruptcy Code, 2016 has significantly reformed India’s insolvency framework by introducing a time-bound and creditor-driven Corporate Insolvency Resolution Process (CIRP). However, with increasing globalization and cross-border commercial activities, insolvency proceedings frequently involve assets, creditors, and stakeholders located in multiple jurisdictions. This paper undertakes an analytical study of the corporate insolvency resolution mechanism in India with particular emphasis on cross-border insolvency issues and the limitations of the existing legal framework. The study critically examines the provisions relating to cross-border insolvency under Sections 234 and 235 of the Code and evaluates their effectiveness in addressing transnational insolvency disputes. It further analyses judicial developments and practical challenges in dealing with foreign creditors, recognition of foreign proceedings, and coordination between domestic and international jurisdictions. The absence of a comprehensive legal framework for cross-border insolvency in India creates uncertainty and procedural inefficiencies, thereby affecting investor confidence and the overall effectiveness of the insolvency regime. The paper also undertakes a comparative analysis with international standards, particularly the UNCITRAL Model Law on Cross-Border Insolvency, which has been adopted by several jurisdictions to facilitate cooperation and coordination in cross-border insolvency cases. The study highlights the gaps in the Indian framework and the need for adopting globally recognized principles to ensure effective resolution of transnational insolvency matters. The paper concludes by proposing policy recommendations for strengthening India’s cross-border insolvency framework, including the adoption of the UNCITRAL Model Law, enhancement of institutional capacity, and development of mechanisms for international cooperation. These reforms are essential to align India’s insolvency regime with global best practices and to address the complexities arising from cross-border insolvency in an increasingly interconnected global economy.