Sumary of Govt proposes framework for cross-border insolvency; seeks comments till Dec 15:
- The government is preparing to come out with a cross-border insolvency resolution framework based on the UNCITRAL model law and is proposed to be made applicable for both corporate debtors as well as personal guarantors to such debtors.
- The corporate affairs ministry, which is implementing the Insolvency and Bankruptcy Code (IBC), has sought comments on the draft framework till December 15. Broadly, cross-border insolvency process pertains to those debtors having assets and creditors overseas.
- According to the ministry, the need for having robust institutional arrangements to deal with cross-border insolvency issues has gained momentum in various jurisdictions, particularly under the aegis of UNCITRAL Model Law, during the last few decades.
- The UNCITRAL Model Law on Cross-Border Insolvency, 1997, is the most widely accepted legal framework to deal with cross-border insolvency issues.
- The law provides a legislative framework that can be adopted by countries with modifications to suit the domestic context of the enacting jurisdiction.
- Given this, applying cross-border insolvency provisions to the pre-pack process may not be suitable at this stage,” it noted.