Answer By law4u team
The Insolvency and Bankruptcy Code (IBC) primarily governs insolvency proceedings within India and does not have explicit comprehensive provisions for direct control or recovery of cross-border assets. The treatment of foreign assets during insolvency is complex, requiring coordination between Indian insolvency authorities and foreign jurisdictions, often relying on international cooperation and existing legal frameworks.
Treatment of Cross-Border Assets Under IBC
Lack of Explicit Provisions
The IBC currently lacks specific sections dealing exclusively with the management or recovery of assets located outside India.
Role of Insolvency Professionals
Insolvency professionals may take steps to identify and report foreign assets, but recovery depends on cooperation with foreign courts and laws.
Jurisdictional Challenges
Indian tribunals like NCLT have jurisdiction over Indian companies but cannot directly enforce claims on assets situated abroad without foreign court recognition.
International Cooperation
Recovery of cross-border assets generally requires mutual legal assistance, recognition of Indian insolvency proceedings by foreign courts, or parallel insolvency proceedings abroad.
Potential for Cross-Border Insolvency Framework
India is exploring incorporating cross-border insolvency provisions based on the UNCITRAL Model Law to facilitate coordinated asset recovery and creditor protection.
Asset Repurchase and Liquidation
Assets located outside India may be liquidated or managed under foreign insolvency laws, with proceeds potentially repatriated to the Indian insolvency estate.
Legal Context and Examples
Section 60, IBC – Jurisdiction of NCLT
Pending legislative proposals – Cross-border insolvency amendments
Current reliance on comity principles for international cooperation
Example
An Indian corporate debtor owns property in the UK. During insolvency, the insolvency professional coordinates with UK courts to initiate parallel insolvency proceedings or enforcement actions to liquidate the property. The proceeds are then sent back to India to be distributed among creditors under the IBC.