The corporate affairs ministry will consider the recommendations and seek Cabinet approval to amend IBC
The country should adopt the United Nations model law to deal with the insolvency cases involving overseas companies, a government-appointed panel has suggested in its report.
The report of the Insolvency Law Committee (ILC) headed by Ministry of Corporate Affairs (MCA) secretary Injeti Srinivas was submitted to finance and corporate affairs minister Arun Jaitley on Monday.
The ministry will consider the recommendations and will finally seek Cabinet approval to amend the Insolvency and Bankruptcy Law (IBC). The proposed cross-border insolvency framework will be included in the IBC to provide a comprehensive insolvency framework for overseas companies. The current law applies to domestic companies only.
“The ILC has recommended the adoption of the UNCITRAL Model Law of Cross Border Insolvency, 1997, as it provides for a comprehensive framework to deal with cross-border insolvency issues,” the government said in a statement.
According to the finance ministry, inclusion of cross-border insolvency chapter in the Insolvency and Bankruptcy Code would be a major step forward and would bring the law on par with that of the matured jurisdictions.
The framework is aimed at enhancing ease of doing business and protect creditors in the global scenario by providing increased predictability and certainty of the insolvency framework.
The panel has also suggested a few carveouts to ensure that there is no inconsistency between the domestic insolvency and the proposed cross-border insolvency frameworks.
TIGHTENING RULES
- The corporate affairs ministry will consider the recommendations and seek Cabinet approval to amend IBC
- The cross-border insolvency framework will be included in IBC to provide a comprehensive insolvency framework
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