Complexities of Group Cross-Border Insolvency and Arbitration in India

The Insolvency and Bankruptcy Code, 2016 (IBC) brought a time-bound and creditor-driven insolvency procedure to India, but it has no comprehensive framework for group or cross-border insolvencies, even though corporate groups and cross-border businesses are now the standard. Since the Code treats each company in a group as a separate debtor, the result is delay, a fragmented resolution process and a loss of value, as happened in the cases of IL&FS and Videocon.

Sections 234 and 235 do provide for cooperation with foreign jurisdictions, but in practice this has not worked because India has no bilateral agreements and no mechanism to allow concurrent proceedings. The draft Part Z also says nothing on group insolvency. The position is made worse by the fact that the IBC, the Arbitration and Conciliation Act, 1996 and the New York Convention operate independently of one another, which leads to conflicts between foreign arbitral awards and the Section 14 moratorium, as well as the public policy exception. This paper examines the IBC along with relevant Indian court decisions, such as those in the Jet Airways and Videocon cases, and compares them with the approaches of the UK, Singapore, the US and the UNCITRAL Model Laws on cross-border and enterprise group insolvency.

It argues that judicial remedies like the one in Jet Airways lack consistency, predictability and international coherence. To address this, the paper suggests that India adopt the 2019 Model Law on Enterprise Group Insolvency and bring its group resolution mechanisms into the IBC. This would include the judicial cooperation provisions in Sections 234 and 235, a moratorium, and approval of the adjudicating authority when foreign judgments are enforced against insolvent debtors, along with a single resolution professional for the group companies.

These reforms would make the system more predictable and rule-based, which should improve value maximization, creditor recoveries and investor confidence. It would also strengthen India’s reputation as a reliable insolvency restructuring jurisdiction and reduce forum shopping.