Archive · 12 Aug 2026
India likely to adopt global model for cross-border insolvency
Sometimes a company that owes money has businesses, customers, or buildings in other countries.
If that company goes bankrupt, local courts have to work with courts in other countries to sort everything out.
India's government is thinking about how to make this easier.
There is a special set of shared rules, like a recipe, that many countries use called the UNCITRAL Model Law.
Instead of making a separate deal with each country, India might just use this shared recipe for everyone.
That would be much faster than making one deal at a time.
Right now, India's rules for handling these situations are not ready yet.
Using the shared recipe could help people and banks that are owed money get a fair result.
Some experts say India should adjust the recipe to fit its own laws, and lawmakers suggested using only parts of it with some changes.
The Indian government is likely to adopt the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) instead of negotiating bilateral agreements with individual countries.
The model law is already used by major economies including the US, UK, Australia, and Singapore, with 62 states across 65 jurisdictions using it.
The move is enabled by Section 240C, newly inserted into the IBC through the 2026 amendments, which empowers the central government to notify rules and foreign jurisdictions.
India's cross-border insolvency provisions remain unimplemented because the relevant rules and notified foreign jurisdictions are still pending.
No bilateral insolvency agreement has been signed under Section 234 since 2017, and a parliamentary panel has asked the Ministry of Corporate Affairs to consider 'selective adoption' of the model with modifications.
- Who
- The Indian government, particularly the Ministry of Corporate Affairs, with inputs from officials and insolvency experts.
- What
- Planning to adopt the UNCITRAL Model Law on Cross-Border Insolvency to implement India's cross-border insolvency regime, instead of pursuing bilateral agreements.
- When
- The decision is under discussion now; the cross-border insolvency provisions of the IBC (Amendment) Act 2026, partially brought into force in May 2026, have not yet taken effect.
- Where
- India.
- Why
- To fast-track implementation, avoid the time and complexity of negotiating separate treaties, and prevent value erosion and competing creditor claims in cross-border cases.
Proponents of the global model
Advocates of caution and tailored approach
Global template vs. bilateral agreements
Proponents of the global model
Adopting the UNCITRAL model law avoids time-consuming negotiations with every country and allows faster rollout of cross-border insolvency rules.
Advocates of caution and tailored approach
Section 234 still provides an option for reciprocal ties with specific countries where needed, and no such insolvency provisions have been included in recent trade agreements like the India-UK CETA.
Framework in statute vs. delegated rules
Proponents of the global model
Leaving implementation to rules under Section 240C gives flexibility to tailor the model law to domestic legal and financial requirements.
Advocates of caution and tailored approach
Experts such as Devendra Mehta argue that putting the substantive framework into the statute itself would have offered greater certainty than relying primarily on rules.
- Proposed framework
- UNCITRAL Model Law on Cross-Border Insolvency (MLCBI)
- Enabling provision
- Section 240C of the Insolvency and Bankruptcy Code, inserted via the 2026 amendments
- Current status
- Cross-border insolvency rules and notified foreign jurisdictions still pending
- Existing route
- Sections 234 and 235 of the IBC, operational since 2017; no bilateral agreement signed so far
- Global usage
- 62 states across 65 jurisdictions
- Trade agreement example
- India-UK Comprehensive Economic and Trade Agreement does not include insolvency recognition provisions
- Parliamentary panel
- Asked MCA to consider 'selective adoption' of the UNCITRAL model with modifications