Insolvency Code: Cross-Border Framework Finally Takes Shape

India finally has a cross-border insolvency provision. The rules that make it work remain unwritten.

By Fiscal Metrics Research16 August 2026 549

Insolvency Code: Cross-Border Framework Finally Takes Shape — · *Unsplash*

In May 2023, a low-cost carrier called Go First filed for its own insolvency. The National Company Law Tribunal admitted the application and imposed a moratorium. All perfectly routine. What followed was not.

A group of aircraft lessors, among them Pembroke Aircraft Leasing, SMBC Aviation Capital and Accipiter Investments, had already terminated their leases and held deregistration authorisations issued under the Cape Town Convention, a treaty India has signed and written into its Aircraft Rules. The Directorate General of Civil Aviation declined to act on them, citing the moratorium. The dispute travelled to the Delhi High Court, which held in April 2024 that the aircraft had never been Go First's property to begin with, and directed the regulator to process the deregistration requests.

Peel away the aviation detail and a plainer problem shows through. India had no settled method for working out where its insolvency law ended and somebody else's began. Judges improvised. Resolution professionals negotiated. Lenders hoped.

A decade of drafts, and nothing to show

The Code has carried two cross-border provisions since 2016. Section 234 lets the Central Government sign bilateral agreements with other countries. Section 235 lets the adjudicating authority send a letter of request to a foreign court, but only where such an agreement already exists. Neither has ever been used. No treaty has been signed in ten years. No letter of request has issued. They are, as practitioners put it, a dead letter, which is roughly what the Joint Parliamentary Committee that inserted them seems to have intended them as.

Meanwhile the paperwork accumulated. The Insolvency Law Committee produced a draft “Part Z” in October 2018, modelled on the UNCITRAL Model Law on Cross-Border Insolvency. The Cross-Border Insolvency Rules/Regulations Committee, chaired by Dr K.P. Krishnan, reported in June 2020. The Ministry of Corporate Affairs invited public comments in November 2021. Then the file went quiet for four years.

What Parliament actually passed

It resurfaced on 12 August 2025, when the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 was introduced in the Lok Sabha and referred, the same day, to a 24-member Select Committee chaired by Baijayant Panda. The committee reported in mid-December 2025. The Lok Sabha passed the Bill on 30 March 2026 and the Rajya Sabha cleared it by voice vote the next day. The President assented on 6 April. It is now Act No. 6 of 2026, and the Ministry of Corporate Affairs brought the bulk of it into force from 26 May 2026.

Tucked into that long statute is Section 240C. It empowers the Central Government to prescribe the manner and conditions for administering cross-border insolvency proceedings, covering recognition of foreign proceedings, the grant of relief, judicial cooperation, assistance and coordination, for such classes of debtors and such countries as the government notifies.

Three features are worth pausing on. The provision opens with a non obstante clause that overrides both the Code and the Companies Act, 2013, so whatever rules emerge will prevail over anything inconsistent in either. The rules can apply either statute with modifications and can assign designated benches to hear these cases. And on the Select Committee's recommendation, the definition of “corporate debtor” has been widened to expressly include persons incorporated with limited liability outside India, without which the whole apparatus would have had an awkward hole in the middle.

The rules must be laid before each House. That is scrutiny, not a veto.

The Select Committee had asked for more than this. It wanted the basic principles of cross-border insolvency written into the Code itself, so that Parliament, and not the drafting table, set the direction. What emerged instead is an enabling provision that delegates almost the entire architecture to subordinate legislation. That is a defensible choice for a regime nobody has road-tested. It is not the gold standard.

“A framework that exists on paper but not in the Gazette is a promise, not a protection — and creditors cannot bank a promise.”

Still waiting for the Gazette

Here is the part that gets lost in the applause. Section 240C was left out of the commencement notification of 26 May. At the time of writing, the enabling provision has not been brought into force and no rules have been framed under it. Commentary through mid-2026, including from Rajasekhar V.K., a former Judicial Member of the NCLT, reads the delay as a sign that the operational framework is still being drafted rather than as any loss of appetite. Either way the practical position is unchanged. There is still no statutory machinery in India for recognising a foreign insolvency proceeding.

What improvisation has achieved so far

Which makes the workarounds worth studying. When Jet Airways collapsed in 2019, parallel proceedings ran in Mumbai and in the Netherlands. The NCLT refused to recognise the Dutch proceeding, correctly, because nothing in the Code permitted it to. On appeal, the NCLAT tried something more inventive. It encouraged the Indian resolution professional and the Dutch administrator to sign a cross-border protocol. That protocol treated India as the centre of main interests, made the Indian process the main proceeding and the Dutch one non-main, obliged both officeholders to share information and coordinate claims, and gave the Dutch administrator a seat at the committee of creditors as an observer without a vote. Both courts approved it. It worked.

It also depended entirely on two cooperative officeholders and two obliging benches. That is a happy accident, not a system.

The asymmetry became slightly embarrassing in March 2025, when the Singapore High Court in Re Compuage Infocom Ltd [2025] SGHC 49 recognised an Indian CIRP as a foreign main proceeding and treated the NCLT, a quasi-judicial tribunal rather than a court in the strict sense, as a foreign court. It gave the resolution professional access to Singapore banking records, while stopping short of permitting assets to be repatriated to India without its leave, so that Singapore creditors could be heard first. Singapore, which adopted the Model Law in 2017, could extend that courtesy. India could not have returned it.

The cost of that gap is not theoretical. Indian banks spent years chasing Vijay Mallya's offshore assets with no reciprocal machinery to lean on. Asset tracing, clawback and the ability to stop two jurisdictions pulling the same estate in opposite directions are the practical dividends of a working regime.

The four choices that will decide this

Sixty-two states across sixty-five jurisdictions have now legislated on the basis of the UNCITRAL Model Law, among them the United States, Great Britain, Japan, South Korea, Australia, Singapore and, most recently, Malaysia. Adoption by itself tells you very little. The modifications tell you everything, and India's are still unwritten. Four questions matter more than the rest.

● Reciprocity. The 2018 committee recommended starting with a reciprocity requirement and relaxing it as experience accumulated. No major adopter has done this. Singapore did not, and has become Asia's restructuring hub. Insist on reciprocity and India will be unable to recognise proceedings from precisely the jurisdictions where its companies borrow, list and litigate.

● COMI. The Model Law presumes the registered office is the centre of main interests. Indian rules will need to spell out what rebuts that presumption, who carries the burden, and the date on which COMI is judged. The commencement of the foreign proceeding is the better date, because it shuts down forum shopping after the fact.

● Interim relief. Draft Part Z left it out altogether. Between a recognition application and a recognition order, assets move and records vanish. The rules should permit provisional stays and preservation orders in that window. Japan manages without an automatic stay, but only because its courts have clear discretionary powers and use them quickly.

● The Gibbs rule. An English decision from 1890, still good law there, holds that debt governed by English law can be discharged only by an English proceeding. A great deal of Indian external commercial borrowing is governed by English law, so a resolution plan sanctioned in Mumbai may not bind a creditor who decides to sue in London. The rules will have to take a position.

Capacity is the quieter problem

None of this survives contact with an overloaded tribunal. ICRA's May 2026 assessment makes uncomfortable reading. Resolution plans approved by the NCLT fell to 225 in FY2026 from 259 the previous year, admissions slipped about 5% to 679, and the average time to resolution stretched to 744 days as on 31 March 2026, against a Code that contemplates 330. Realisations against admitted claims roughly halved, to about 23%. Cross-border matters are harder and slower than the domestic ones already queued up.

The Select Committee saw this coming and asked for more benches and better infrastructure funding alongside the new frameworks. Practitioners have converged on much the same list: one or two designated cross-border benches, training in COMI analysis and Model Law practice, and a court-to-court communication protocol along the lines of the Judicial Insolvency Network guidelines already used by the Singapore courts and the US bankruptcy courts in Delaware and New York.

The doorway and the door

The honest summary is this. India spent eight years drafting a cross-border insolvency regime and has now built the doorway. The door itself, meaning the rules, the notified countries and the designated benches, has not yet been hung. For a lender financing an Indian company out of Singapore or London, and for an Indian bank chasing assets that left the country a decade ago, the difference between a doorway and a door is the entire point.

This reform will be won or lost in the drafting, not in the passing. And the drafting is happening now, largely out of sight.