Cross Border Insolvency In India: What Rules Must Say

In May 2023, Go First – an Indian low-cost airline – filed for voluntary insolvency under section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC). The Adjudicating Authority (NCLT) admitted the application and imposed a moratorium under section 14.^[1]

That much was routine. What followed was not.

The aircraft lessors – companies such as Pembroke Aircraft Leasing, SMBC Aviation Capital and Accipiter Investments – had already terminated their lease agreements. They held “Irrevocable Deregistration And Export Request Authorisation (IDERA)” under the Cape Town Convention (CTC), an international treaty to which India is a signatory, and incorporated into Indian law under the Aircraft Rules, 1937. The lessor sought deregistration of the aircraft. The Director General of Civil Aviation (DGCA) refused, citing the moratorium.

The Delhi High Court was then asked: does the IBC's moratorium override the lessors' right to repossess its property under an international treaty? In a series of interim orders, the Court held that the aircraft did not form part of Go First's assets – they were leased, not owned – and that the termination of leases predated the insolvency commencement order. The moratorium under section 14(1)(d) did not apply. Eventually, in April 2024, the Court directed the DGCA to process the deregistration applications.^[2] It also held that a subsequent Central Government notification exempting aircraft, engines and airframes from the IBC moratorium was retrospective, curing the earlier legal uncertainty.

The Go First case was not an outlier. It was a symptom of a deeper problem: India has no coherent framework for resolving conflicts between domestic insolvency law and international obligations, let alone for recognising foreign insolvency proceedings or coordinating across jurisdictions.

The IBC has two provisions - sections 234 and 235 - that were intended to address cross-border issues. They have never been operationalised. No bilateral treaties have been signed under section 234. No letters of request have been issued under section 235. When a foreign representative comes to the Adjudicating Authority seeking recognition of a foreign proceeding, or when a domestic insolvency touches assets or obligations governed by foreign law, the Adjudicating Authority must improvise.

This article argues that the uncertainty is finally being addressed. The IBC Amendment Act, 2026 has introduced section 240C, an enabling provision that empowers the Central Government to make rules for cross-border insolvency. The provision has not yet been notified. The rules are still being drafted. The central question now is not whether India will have a cross-border regime, but what that regime should look like.

In what follows, I set out the current state of the law, the lessons from the Go First and Jet Airways cases, the comparative framework of the UNCITRAL Model Law and a practical checklist for the rules that must be framed.

Where we are today: sections 234, 235 and the long pause

The IBC as originally enacted contained two provisions on cross-border insolvency. They were added at the recommendation of the Joint Parliamentary Committee, almost an afterthought.^[3]

Section 234 empowers the Central Government to enter into bilateral agreements with other countries for enforcing the provisions of the Code. Section 235 allows the resolution professional or the liquidator to apply to the Adjudicating Authority for a letter of request to a foreign court where the debtor's assets are located abroad, but only if a reciprocal arrangement exists.

These provisions have never been operationalised. No bilateral treaty has been signed under section 234. No letter of request has been issued under section 235. For all practical purposes, they are a dead letter.

For years, this was treated as a legislative gap that would eventually be filled. Committees recommended adoption of the UNCITRAL Model Law. The Insolvency Law Committee submitted a draft Part Z in 2018. The Cross-Border Insolvency Rules and Regulations Committee (CBIRC) submitted its report in 2020. The Ministry of Corporate Affairs invited public comments in 2021.

Then, for a while, nothing visible happened.

But something was happening. In 2026, Parliament passed the IBC Amendment Act. It received the President's assent. And tucked inside it is section 240C – a provision that fundamentally changes the landscape.

The enabling provision: section 240C

Sub-section (1) of section 240C deserves to be set out in full:

“(1) Notwithstanding anything to the contrary contained in this Code and the Companies Act, 2013, the Central Government may prescribe the manner and conditions for administering and conducting cross-border insolvency proceedings under this Code, including the process for recognition of proceedings, granting relief, judicial cooperation, assistance and coordination in connection with such proceedings, for such class or classes of debtors or corporate debtors involving such countries or territories outside India, as may be notified by the Central Government in this regard.”

These features are immediately striking.

First, the provision overrides the IBC and the Companies Act. Whatever rules are framed will prevail over any inconsistent provision in either statute.

Second, the Central Government has been given a very wide discretion. It can decide which classes of debtors, which countries, which benches. It can even modify the application of the IBC and the Companies Act as needed.

Third, the rules will be laid before each House of Parliament before they are issued. That is a safeguard, but it is not approval. Parliament will have an opportunity to scrutinise, but not to veto unless it passes a resolution.

Now, the question that practitioners keep asking me: why has section 240C not been notified yet?

The more likely explanation is that the rules are still under preparation. Once the operational framework is finalised, notification of section 240C would be expected to follow.

But the delay does create uncertainty. And the quality of the rules, when they eventually come, will determine whether India moves from ad hoc improvisation to a credible, predictable cross-border regime.

The Jet Airways protocol: improvisation that worked

The best illustration of the current gap, and of what is possible even without a statute, is the Jet Airways insolvency.

Jet Airways was an Indian airline with a hub in Amsterdam. When it collapsed, insolvency proceedings were commenced in India before the Adjudicating Authority at Mumbai, and separately in the Netherlands before a Dutch court. The Dutch administrator applied to the Adjudicating Authority for recognition. The Adjudicating Authority refused, holding that there was no provision in the IBC to recognise a foreign insolvency proceeding.

On appeal, the NCLAT took a different view. It did not invent a power of recognition out of thin air. Instead, it encouraged the Indian Resolution Professional and the Dutch administrator to enter into a “Cross-Border Insolvency Protocol.” That protocol:

1. Recognised India as a Centre of Main Interests (COMI) of Jet Airways.

2. Treated the Indian proceeding as the main proceeding and the Dutch proceeding as a non-main proceeding.

3. Required the two insolvency professionals to cooperate, share information, coordinate claims and preserve assets.

4. Gave the Dutch administrator a right to attend meetings of the Committee of Creditors as an observer without voting rights.

The protocol was approved by the NCLAT and by the Dutch court. The two proceedings run in parallel without conflict. Creditors in both jurisdictions were able to participate.

The Jet Airways protocol was a remarkable piece of judicial creativity. It showed that cooperation is possible even without a statutory framework. But it also showed the limits of improvisation. A protocol depends on the goodwill of the parties and the courts. It cannot be imposed. It is not predictable. And it leaves many questions unanswered – questions that only a properly framed set of rules can resolve.

The UNCITRAL Model Law: what it does and does not do

The international benchmark for cross-border insolvency is the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI), adopted in 1997. It has been enacted by over sixty countries, including the United States (as Chapter 15 of its Bankruptcy Code), the United Kingdom, Singapore, Japan, South Korea and Australia.

The Model Law does not attempt to create a single global insolvency regime. It does not unify substantive insolvency law. It respects national sovereignty. What it does is provide a procedural framework for four things:

1. Access: foreign representatives and foreign creditors can approach local courts directly.

2. Recognition: foreign proceedings can be recognised as “main” (where the debtor's COMI is located) or “non-main” (where the debtor has an establishment).

3. Relief: upon recognition, automatic stays and discretionary relief become available.

4. Cooperation: courts and insolvency professionals are required to cooperate with their foreign counterparts.

The Model Law is not a treaty. It is a template. Countries can adopt it with modifications. Many have. Singapore adopted it almost verbatim and has become a regional restructuring hub. Japan and South Korea adopted it with significant modifications, particularly dropping the automatic stay and limiting court-to-court cooperation. The United States adopted it as Chapter 15, but with its own procedural variations.

The lesson is clear: adoption of the Model Law is not enough. The manner of adoption matters. And that is where India's proposed rules will make all the difference.

Lessons from other jurisdictions: what works, what doesn't

As already stated, the UNCITRAL Model Law has been adopted by over sixty countries. But adoption alone tells us little. The real value lies in how different jurisdictions have adapted and implemented the framework. India's rule-makers would be unwise to ignore their experience.

Australia: codified court-to-court cooperation

Australia's Cross-Border Insolvency Act, 2008 is supplemented by a detailed practice note from the Federal Court. That practice note explicitly adopts the Judicial Insolvency Network (JIN) Guidelines for communication and cooperation between courts.^[4] It requires parties to draft coordination agreements and sets out expected procedures for joint hearings. The lesson is not that India must copy the Australia text, but that a practice direction can bridge the gap between legislation and courtroom reality, not merely the rules. India's designated cross-border bench should have its own practice directions on communications protocols.

Japan: no automatic stay, but functional relief

Japan ratified the MLCBI in 2001, by enacting the Act on Recognition of and Assistance for Foreign Insolvency Proceedings (RAFIP), but deliberately omitted Article 20's automatic stay. Relief is entirely discretionary. Yet the Tokyo District Court has granted recognition and assistance in twenty-two cases (as of March 2025), including stays, asset preservation and administration orders. The Japanese experience shows that automatic stay is not indispensable, provided that courts have clear discretionary powers and are trained to exercise them swiftly. India's draft Part Z dropped interim relief altogether – a step too far. Japan suggests a middle path: discretionary relief, available promptly, without automaticity.

United Kingdom: multiple gateways, deliberate choice

The UK's Cross-Border Insolvency Regulations, 2006 gave force to the Model Law. But they do not make it the exclusive route. English courts can also provide assistance under common law principles of comity or under section 426 of the Insolvency Act, 1986 regarding reciprocal arrangements with designated countries.^[5] This multiplicity has not caused chaos, it has given courts flexibility. India must decide explicitly whether the new rules will be the sole gateway for cross-border recognition, or whether NCLT benches can also rely on inherent powers or comity. It should not remain so.

The UK Supreme Court's decision in Rubin and another (Respondents) v Eurofinance SA,^[6] held that the Model Law does not, on its own, provide for enforcement of foreign insolvency-related judgments (such as avoidance orders). That uncertainty led directly to the adoption of a separate UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments in 2018,^[7] which India may also consider in due course.

Singapore: no reciprocity, full adoption

Singapore adopted the Model Law in 2017 without a reciprocity requirement and without diluting the “manifestly contrary” public policy standard. It has since become Asia's leading restructuring hub. The contrast with India's Insolvency Law Committee recommendation – that of reciprocity as a starting condition – is stark. If India insists on reciprocity, it will be unable to recognise proceedings from the United States, the United Kingdom or Singapore, unless those countries separately negotiate bilateral treaties. That would be a self-defeating outcome. Singapore's success suggests that confidence, not reciprocity, attracts cross-border cooperation.

The common thread in most of the jurisdictions is that the modifications effected were purposeful and not protective. They asked: what will make cross-border cooperation workable? India's rule-makers should ask the same question and resist the temptation to over-design safeguards that end up strangling the regime that they are meant to enable.

What The Rules Must Get Right: A Checklist

Drawing from the Insolvency Law Committee Report, the CBIRC recommendations, the Jet Airways experience and discussions with colleagues who handled cross-border matters,  offer the following checklist for the cross-border rules.

1. COMI: pick a definition, pick a date

The concept of COMI is the foundation of the recognition framework. The Model Law provides a presumption: the debtor's registered office (or habitual residence, for individuals) is its COMI unless proved otherwise. That is a good starting point. But Indian courts need more.

The rules should:

* List the factors that can rebut the presumption. For example, location of management, principal assets, employees, creditors, governing law of contracts.

* State clearly who bears the burden of proof (the party asserting that COMI is not the registered office should bear the burden).

* Specify the relevant date for determining COMI. The better view, adopted in many jurisdictions, is the date of commencement of the foreign proceeding and not the date of the recognition application. That provides certainty and prevents forum shopping after the fact.

2. Interim relief: do not drop it

The Insolvency Law Committee's draft Part Z omitted interim relief entirely. That was a mistake. Between the filing of a recognition application and the final order, assets can be dissipated, money can be moved overseas and evidence can disappear. The rules must empower the Adjudicating Authority to grant urgent provisional relief pending the recognition decision – stays, asset preservation orders, even the appointment of a temporary representative.

3. Reciprocity: handle with care

The Insolvency Law Committee recommended that the Model Law be adopted initially on a reciprocity basis. No major adopting economy (the US, the UK, Singapore) has done so. Reciprocity sounds fair in theory, but in practice it creates uncertainty and invites tit-for-tat refusals. If India insists on reciprocity, the rules should at least empower the central government to waive it case by case, or to notify countries on a list, and keep that list updated.

4. Direct access for foreign representatives

The Model Law gives foreign representative the right to apply directly to local courts. The Insolvency Law Committee suggests that foreign representatives might need to act through Indian insolvency professionals. The CBIRC rightly rejected that idea. Direct access saves time, saves money and signals that India is open for business. The rules should make direct access explicit.

5. Foreign creditors: equal treatment, not preferential treatment

The Model Law proceeds on a simple principle: foreign creditors should not be discriminated against merely because they are foreign. Equally, they should not enjoy any preference over domestic creditors. The rules should make clear that foreign creditors may participate in insolvency proceedings, submit claims and receive notices on the same basis as similarly situated domestic creditors. This is not just a matter of fairness, it is an important signal to international lenders and investors that India's insolvency framework is open, predictable and non-discriminatory.

6. The Gibbs Principle: the sleeping tiger

Under the old English rule in Anthony Gibbs & Sons v. La Société Industrielle et Commerciale des Métaux (1890),^[8] a debt governed by English law can be discharged only by English insolvency proceedings, no matter what a court in another jurisdiction does. That rule is still good law in England.

What does this matter for India? Because a very large number of Indian foreign currency loans, External Commercial Borrowings agreements and international bond issuances are governed by English law. If an Indian company goes into CIRP, and its English-law governed debt is restructured or discharged under an Indian resolution plan, an English court applying the Gibbs rule may refuse to recognise that discharge. The creditor could then pursue the debt in England, potentially undermining the entire Indian resolution.

What can the rules do? Several options exist:

* Rely on the public policy exception: recognition of the foreign main proceeding includes discharge of debts, unless manifestly contrary to Indian public policy.

* Adopt the “legitimate expectation” doctrine: creditors dealing with an Indian company must reasonably expect that its insolvency may be resolved in India.

* Include an express provision that discharge of a debt in a recognised foreign main proceeding is effective in India, regardless of the governing law of the debt, subject to limited exceptions.

That is not an easy problem. But ignoring it is not an option.

7. Public policy: keep the “manifestly” word

Article 6 of the Model Law allows a court to refuse recognition or relief if it would be “manifestly contrary” to the public policy of the enacting State. The word “manifestly” is important. It sets a high threshold. Some countries have dropped it, making it easier to refuse recognition. India should keep it. And the rules should make clear that mere difference in substantive law – different priority rules, different limitation periods – does not ipso facto amount to a public policy violation.

8. One bench for cross-border matters

Cross-border insolvency is specialised work. It requires familiarity with foreign laws, protocols, COMI analysis and court-to-court communication. Spreading these cases across all NCLT benches will lead to inconsistent outcomes and delay. The rules should designate one bench – preferably in Mumbai or Delhi – as the cross-border bench. That bench should have exclusive jurisdiction over recognition applications and related relief. Its members should receive training on the Model Law and international best practices.

9. Protocols: encourage them, do not replace them

The Jet Airways protocol worked. Even after the rules come into force, there will be cases where an ad hoc agreement between insolvency professionals, approved by the courts, is more flexible and efficient than a rigid statutory framework. The rules should explicitly empower the NCLT to approve, supervise and enforce cross-border insolvency protocols. They should also provide guidance on the minimum content of such protocols: communication, information sharing, claims coordination, asset preservation. There is no point in mandating a one-size-fits-all template.

10. What the rules must avoid

While I have focussed on what the rules should include, let me also say a word about what they should avoid.

First, avoid over-regulation. The Model Law works because it is lean. It establishes principles, not detailed codes of procedure. Indian rules should follow that philosophy.

Second, avoid creating parallel gateways that conflict. The rules should make clear whether the cross-border provisions are the exclusive route for recognition and relief, or whether courts can also rely on common law principles of comity and inherent jurisdiction. The UK has multiple gateways, while the US has a single one (Chapter 15). Each approach has merits, but it is better that the choice must be explicit.

Third, avoid diluting the role of the Adjudicating Authority. The rules should not require the Central Government's prior approval for every recognition application. The public policy exception already gives the government a voice, let it not become a veto.

11. A marginal note on institutional readiness

Rules are necessary, but they are not sufficient. The NCLT, as currently constituted, is overburdened. Adding cross-border cases which are inherently more complex and time-consuming will add to the strain.

The government should consider:

* Increasing the number of benches, or at least the number of members on the designated cross-border bench.

* Providing specialised training on the Model Law, COMI analysis and court-to-court communication protocols.

* Encouraging the use of technology: video conferencing for joint hearings, secure portals for information exchange, to facilitate cooperation with foreign courts.

* A sophisticated statute cannot compensate indefinitely for inadequate institutional bandwidth.

India has taken the first step. Section 240C is on the books. The rules are being drafted. The question is no longer whether we will have a cross-border insolvency regime, but exactly what kind of regime we will have.

Ideally, however, the core principles of cross-border insolvency – recognition, COMI, relief and cooperation – should have found a place in the Code itself, with only the minor procedural details left to the rules. What we have instead is an enabling provision (section 240C) that delegates almost everything to subordinate legislation. That is not the end of the world, but it is not the gold standard either. Legislators in the future may wish to revisit this choice.

If the rules are well-drafted, with clear definitions of COMI, preserving the option for interim relief, handling reciprocity with care, granting direct access, confronting the Gibbs problem, keeping the public policy exception as narrow as possible, designating a special bench and encouraging protocols, then India would have moved from ad hoc improvisation to a credible, predictable framework.

On the other hand, if the rules are not well drafted, the Adjudicating Authority will grapple with the same problems: foreign proceedings that cannot be recognised, assets that cannot be traced, creditors who run to English courts, and resolution plans that are incomplete because they cannot bind debt governed by foreign-law.

The Jet Airways protocol showed what is possible even without a statutory framework. The rules must now give the Adjudicating Authority the tools it needs. Not occasionally, not by judicial innovation, but as a matter of right.

India may also consider, in the next phase, adopting the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments, which would complement the cross-border recognition framework and provide clarity on the enforcement of foreign insolvency orders such as avoidance judgments and discharge orders.

That is the regime Indian creditors deserve. That is the regime Indian debtors need. And with careful drafting, it is well within our reach.

1. CP No.(IB)-264(PB)/2023 dated 10 May 2023. ↑

2. 2024 : DHC : 3279 decided on 26 Apr 2024 [WP (C) No.6569/2023]. ↑

3. Report of the Joint Committee on the Insolvency and Bankruptcy Code, 2015, Sixteenth Lok Sabha, ¶ 62, at 43 (2016). ↑

4. Judicial Insolvency Network, Guidelines for Communication and Cooperation Between Courts in Cross-Border Insolvency Matters (2016), https://isomer-user-content.by.gov.sg/132/2c8258a2-0adf-47ab-a059-b66375e0b501/Guidelines-for-Communication-and-Cooperation-in-Cross-Border-Insolvency.pdf ↑

5. Insolvency Act 1986, § 426 (UK). ↑

6. [2012] UKSC 46 decided on 24 Oct 2012. ↑

7. United Nations Commission on International Trade Law, UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments with Guide to Enactment (2019), https://uncitral.un.org/sites/default/files/media-documents/uncitral/en/ml_recognition_gte_e.pdf. ↑

8. (1890) 25 QBD 399 (Court of Appeal) decided on 26 June 1890. ↑