Global capital flows, multinational corporate groups and cross-jurisdictional credit chains make insolvency today a transnational problem. When a debtor has assets, creditors or affiliates in more than one country, a purely domestic insolvency statute, however well-crafted, runs into limits. The UNCITRAL Model Law on Cross-Border Insolvency (1997) was designed to fill that gap by creating predictable rules for recognition, cooperation and coordinated relief across borders. So where does India stand, and is it ready to adopt the Model Law? This post explains the practical stakes, India’s current position, the institutional questions (NCLT vs. Debt Recovery Tribunal, role of NCLT insolvency lawyer and corporate lawyer) and what adoption would mean for everyday problems such as cheque bounce claims and debt recovery.
Why cross-border rules matter
Imagine a corporate group headquartered in India with key assets in the UAE, Singapore and the UK. A foreign creditor obtains a judgment or commences insolvency in one jurisdiction; Indian creditors or operational creditors want clarity on how their claims will be treated and whether assets in India will be made available for a global rescue. Without an accepted cross-border insolvency framework, parties resort to a scramble, parallel proceedings, conflicting orders, and delays that erode value. The Model Law aims to reduce this friction by (a) allowing foreign representatives access to domestic courts; (b) providing for recognition of foreign proceedings; and (c) enabling coordinated relief.
India’s current legal posture
India’s Insolvency and Bankruptcy Code (IBC), 2016, is the central statute for corporate insolvency, but its cross-border elements are limited. Sections such as 234–235 provide some scope for cooperation but are largely skeletal and dependent on bilateral arrangements that are not in place. Recognising this gap, the Insolvency Law Committee prepared a “Draft Part Z” (based on the Model Law) for incorporation into the IBC; policy conversations and committee reports have repeatedly recommended a UNCITRAL-based part while also proposing India-specific modifications. Recent reform activity and an IBC amendment Bill proposed in 2025 explicitly signal the intention to introduce a structured cross-border insolvency framework. Insolvency and Bankruptcy Board of India+1
Recent judicial and policy pressures for reform
High-profile insolvency disputes involving multinational elements have exposed practical problems. For instance, judicial interventions that later unsettle tribunal approvals have unsettled investors and highlighted legal unpredictability in complex restructurings. Policy makers and the IBBI have publicly discussed cross-border reform as a priority, and several legal practitioners and think-pieces have urged adoption of a Model Law aligned framework that balances access with safeguards such as public policy exceptions. These developments have accelerated momentum for statutory change.
Institutional choice: who should handle cross-border cases: NCLT or Debt Recovery Tribunal?
One of the core design questions for India is institutional: should cross-border corporate insolvency matters be concentrated in the National Company Law Tribunal (NCLT), or should certain types of creditor recovery remain with the Debt Recovery Tribunal (DRT) or other forums? The IBC’s focus is corporate resolution (and NCLT is its principal tribunal), which makes NCLT the natural host for Model Law functions in corporate matters. However, operational creditors sometimes use remedies like cheque bounce proceedings or DRT petitions; convergence will require legislative clarity to avoid forum shopping and conflicting orders. The IBBI and commentators have flagged these coordination needs as central to any adoption plan.
Practical consequences for lawyers and creditors
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For a corporate insolvency lawyer / NCLT insolvency lawyer: Adoption would change practice materially. Foreign insolvency representatives would seek recognition before the NCLT (or a designated authority), requiring Indian counsel to advise on cross-recognition standards, comity, relief scope and priority issues. Litigation strategy would need to factor in stay/relief applications under the Model Law and inter-play with existing IBC timelines.
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For a corporate lawyer advising creditors: The Model Law would offer clearer tools to enforce cross-border orders and to coordinate creditor committees across jurisdictions, but also create a new layer of choice: where to bring ancillary proceedings, when to seek recognition, and how to protect domestic recoveries.
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For operational creditors (cheque bounce, recovery agents): Typical domestic remedies like cheque bounce prosecutions (under the Negotiable Instruments Act) or fast-track DRT enforcement will continue to matter. But where the debtor has an ongoing foreign insolvency or assets abroad, operational creditors may have to engage in cross-border recognition processes to secure their share in a global resolution, or move for interim relief in the domestic forum. This will make timely legal advice essential.
Use of Special Leave Petition (SLP) to the Supreme Court will likely persist as a backstop for conflicts of law or constitutional questions, but a clear Model Law regime should reduce the frequency of SLPs by improving predictability at the tribunal level.
Key challenges India must address before full adoption
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Legislative drafting: India’s Draft Part Z proposed certain departures from the UNCITRAL text (eg. public policy carve-outs). Precise drafting is crucial: ambiguous exceptions will spawn litigation.
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Forum coordination: clear rules are needed to specify the role of NCLT, DRT and civil courts in cross-border matters so that creditors and practitioners aren’t left guessing.
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Judicial capacity and specialist benches: NCLT benches must be equipped to handle cross-border evidence, foreign law issues and international comity principles. Training and practice directions will help.
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Creditor protection and public policy: balancing recognition of foreign proceedings with India’s public policy (including employment, taxes, fraud reviews) is politically sensitive and requires calibrated safeguards.
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Speed and predictability: investors need assurance that tribunal-sanctioned restructurings won’t be routinely reversed after long delays; otherwise, cross-border rescue financing will remain expensive or scarce. Recent reversals have highlighted this risk.
Benefits if India gets it right
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Improved recoveries: coordinated cross-border cooperation increases asset realisation and value preservation for creditors.
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Attracting global capital: predictability in insolvency is a key factor for distressed asset investors and lenders.
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Efficient restructuring: global deals (pre-packs, restructuring plans) become feasible when jurisdictions recognise each other’s processes.
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Clarity for practitioners: NCLT insolvency lawyers and corporate lawyers will have a clearer playbook for multinational cases.
Practical recommendations (quick checklist)
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Designate NCLT as the primary forum for corporate cross-border recognition and create practice directions for foreign representatives.
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Harmonise procedural timelines to avoid conflicts with cheque bounce and DRT processes; set rules for interim relief and asset preservation.
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Limit public policy exception carefully and publish guidance/examples to reduce litigation over its scope. Aarna Law
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Invest in training NCLT judges and building capacity for handling foreign law and evidence.
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Encourage early disclosure and cooperation mechanisms (data rooms, cross-border creditor committees).
Is India ready?
India is closer than ever to a modern, Model Law-inspired cross-border insolvency framework: expert committees, draft Part Z proposals and legislative amendments point in that direction. But readiness is not just a political decision, it requires tight drafting, institutional clarity (NCLT vs DRT), judicial capacity building and careful calibration of public policy safeguards. For corporate insolvency lawyers, NCLT insolvency lawyer practitioners, corporate lawyers and creditors accustomed to domestic routes (from cheque bounce prosecutions to DRT petitions and SLP appeals), the next few years will be transformational. If implemented thoughtfully, the Model Law will reduce uncertainty and unlock cross-border restructurings but if rushed or ambiguously framed, it risks more litigation and investor hesitation. India’s task is to pick the path that preserves domestic safeguards while embracing international predictability. The stakes for creditors, firms and the economy are high.
