The Supreme Court recently noted that the principle aims of the IBC are to promote investment, and resolution of insolvencies of corporate persons, firms, and individuals in a time bound manner. The IBC consolidated and amended a web of laws which had led to an ineffective and inefficient mechanism for resolution of insolvencies marked with significant delays.
One of the key aspects that enhances India’s global appeal is the IBC’s provision for cross-border insolvency cases. The Insolvency and Bankruptcy Code contains provisions enabling cross-border insolvency cases through bilateral agreements and the issuance of letters of request to foreign courts by Adjudicating Authorities (AAs) under section 234 and section 235. Through bilateral agreements and the issuance of letters of request to foreign courts, the IBC enables seamless resolution of insolvency cases involving international stakeholders. This aspect is particularly significant in today’s interconnected global economy, where businesses operate across borders, and investment flows transcend geographical boundaries.
Moreover, the adoption of the UNCITRAL Model Law, with necessary modifications to suit the Indian context, further strengthens India’s position as an attractive investment destination. The Model Law provides a well-established legal framework for handling cross-border insolvency issues, offering clarity and predictability to investors and creditors alike. By aligning with international best practices, India demonstrates its commitment to creating a conducive environment for investment and fostering economic growth.
Pertinently, National Company Law Appellate Tribunal (NCLAT) in Jet Airways case while dealing with the issue that when separate ‘Corporate Insolvency Resolution Process’/ liquidation proceedings have been initiated against same ‘Corporate Debtor’ one in India and another in Netherland (North Holland), whether by a Joint Agreement or understanding between the ‘Resolution Professional’ of ‘Corporate Debtor’ in India and Administrator in Holland (Netherland) one proceeding in India can proceed for maximization of the asset of the ‘Corporate Debtor’ and balancing all the stake holders, including the Indian/Offshore Creditors/ Lenders. was successful in implementing cooperation between the Bankruptcy Administrator and Resolution Professional, granting the Bankruptcy Administrator permission to attend committee of creditors meetings solely as an observer. A cross-border insolvency protocol was developed by the Resolution Professional and the Bankruptcy Administrator, incorporating the principles of the Model Law.
Furthermore, the effective implementation of the IBC enhances legal certainty and transparency, which are paramount for attracting foreign investment. Investors seek assurance that their rights will be protected and enforced in a timely and efficient manner. The IBC’s emphasis on time-bound resolution processes and the protection of creditors’ interests contributes to building trust and confidence in India’s insolvency regime.In addition to facilitating investment inflows, the IBC plays a crucial role in revitalizing distressed businesses and preserving economic value. By providing a mechanism for the orderly resolution of insolvency cases, the IBC encourages entrepreneurship and risk-taking while ensuring accountability and responsibility in corporate governance.In conclusion, leveraging the IBC to enhance India’s global appeal requires a concerted effort to strengthen its implementation, improve institutional capacity, and promote awareness among stakeholders. By capitalizing on the IBC’s potential to unlock investment opportunities and foster economic resilience, India can position itself as a preferred destination for international investors seeking growth and diversification.
The author is Partner Designate, Litigation at S&A Law Offices.
