Govt proposes framework for cross-border insolvency; seeks comments till Dec 15

govt proposes framework for cross border insolvency seeks comments till dec 15

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.

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