India does not yet have a comprehensive cross-border insolvency framework in force -- Sections 234 and 235 of the IBC allow the central government to enter bilateral agreements with other countries and to request a foreign court's assistance in a specific case, but very few or no such bilateral agreements are understood to have actually been concluded, leaving these provisions largely unused in practice. A framework based on the UNCITRAL Model Law on Cross-Border Insolvency has been under discussion since at least 2018 and the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 gives the central government rule-making power to address cross-border insolvency, but a comprehensive, operative regime was not yet in force as of the most recent information available to this platform. This means an NRI dealing with a cross-border insolvency situation -- whether as a creditor of an Indian company with assets abroad, or vice versa -- currently faces significant practical uncertainty and should get specialised legal advice early.
Where India's cross-border insolvency law currently stands
Unlike many other major economies, India has not yet adopted a comprehensive statutory framework for
cross-border insolvency, despite this being an acknowledged gap for years. The IBC's only current
cross-border tools are Section 234, which empowers the central government to enter bilateral agreements
with other countries' governments for enforcing the IBC's provisions and for reciprocal treatment of
insolvency proceedings, and Section 235, which allows an Indian court or the Adjudicating Authority
(NCLT) to formally request assistance from a foreign court in a specific case where the corporate debtor's
assets are located abroad. In practice, very few, if any, bilateral agreements under Section 234 are
understood to have actually been concluded, meaning these mechanisms have seen limited real-world use, and
Indian insolvency professionals dealing with foreign assets or foreign creditors have generally had to
rely on more improvised, case-by-case cooperation with foreign courts and counsel rather than a
predictable statutory pathway.
The proposed UNCITRAL Model Law framework, and the 2025 Amendment's contribution
India's Insolvency Law Committee recommended adopting a framework based on the UNCITRAL Model Law on
Cross-Border Insolvency as far back as 2018, which would establish clearer rules for recognising foreign
insolvency proceedings in India, allowing foreign insolvency representatives to access Indian courts, and
coordinating parallel proceedings across jurisdictions -- broadly the internationally recognised standard
many other countries have already adopted. As of the most recent information available to this platform,
a dedicated, comprehensive cross-border insolvency chapter along these lines had not yet been enacted,
though the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 that passed Parliament in early 2026
includes provisions giving the central government rule-making authority specifically to address
cross-border insolvency coordination, alongside group insolvency. This platform recommends checking for
updated notifications and rules under this authority, since the precise operative framework may develop
materially after this content was researched.
What this practical gap means for NRI creditors and companies with foreign assets
For an NRI who is a creditor of an insolvent Indian company, or an Indian creditor pursuing a debtor
with assets located abroad, the absence of a comprehensive cross-border framework means outcomes can
depend heavily on the specific facts, the foreign jurisdiction involved, and whether that jurisdiction's
own courts are willing to recognise and cooperate with an Indian insolvency proceeding as a matter of
comity or under their own domestic law, rather than a predictable, codified Indian statutory right. This
platform recommends that anyone facing a cross-border insolvency situation -- whether recovering assets
held abroad by an Indian corporate debtor, or pursuing a foreign debtor's assets located in India --
engage insolvency counsel experienced in cross-border matters at the earliest stage, since strategy (which
jurisdiction to approach first, whether ancillary proceedings are needed abroad, and how to preserve
assets pending resolution) can materially affect the ultimate recovery, and options that exist today may
change as India's framework develops.
Common mistakes people make with cross-border insolvency situations:
- Assuming Indian insolvency orders will automatically be recognised and enforced against assets
located abroad -- recognition currently depends heavily on the specific foreign jurisdiction's own
law and cooperation, not a guaranteed Indian statutory mechanism.
- Not engaging cross-border insolvency counsel early, when strategic decisions about where and how
to proceed can materially affect recovery.
- Assuming Sections 234 and 235 provide a reliable pathway -- in practice, very few bilateral
agreements are understood to exist, limiting their real-world usefulness.
