INTRODUCTION

It’s very common to hear the news about companies, industries, or firms going bankrupt. The companies go bankrupt for various reasons, like poor decision-making, non-repayment of debt, increased competition, disputes with creditors or other members of the company, etc. These businesses not only severely damage themselves, but they also affect a large number of banks, financial institutions, small businesses, workers, clients, creditors, and eventually a large number of families, as well as the economy at large. But the major problem occurs when the business relationship has extended to multiple countries. Speedy growth in trade and technology is resulting in the creation of multiple cross-border relations. In this fast-growing corporate world, having business relations with other countries leads to the presence of creditors and debtors in numerous countries, resulting in the overlap of different laws and procedures. IBC (2016 majorly deals with domestic laws regarding insolvency and bankruptcy proceedings in India but it also addresses the Cross-border insolvency.

WHAT IS CROSS BORDER INSOLVENCY

A circumstance known as “cross-border insolvency” occurs when a bankrupt debtor has credit in many jurisdictions or countries. The following reasons make the cross-border insolvency procedure crucial:
  1. It can assist creditors in recovering access to assets that the debtor may have retained outside the country.
  2. Equitable protection of national and foreign creditors’ rights
  3. It can handle the legal concerns pertaining to cross-border company transactions more effectively.
     

CROSS BORDER INSOLVENCY UNDER IBC, 2016

    Section 234 of IBC, 2016 –
  1. section 234 of IBC empowers the central government to enter into the agreement with the government of any country outside India in order to enforce the provisions of this code.
  2. Further it states that the central government may direct that the application of provisions of this code shall be subjected to certain conditions specified in relation the assets of the corporate debtor, including the personal guarantor of a corporate debtor.
  3. The assets may situate at any place in a country outside India with which the reciprocal arrangements have been made.
    Section 235 of IBC, 2016 –
  1. In the course of insolvency resolution process, liquidation or bankruptcy proceedings, the resolution professional, liquidator or the trustee in bankruptcy proceedings is of the opinion that the assets of the corporate debtor including the personal guarantor of a corporate debtor are situated in any other country with which the reciprocal arrangements have been made, then they can make an application to the adjudicating authority that evidence or action relating to such assets is required.
  2. It further states that the adjudicating authority after receiving such application is satisfied that the action or evidence in relation to such assets is required, it may issue a letter of request to a court or any authority of such other country which is competent to deal with the request.