Cross-Border and Individual Insolvency Frameworks
The government has decided to delay the introduction of a Cross-Border Insolvency framework and an out-of-court individual delinquency mechanism as part of the amendments to the Insolvency and Bankruptcy Code (IBC) planned for this year. These might be considered in the future based on further assessments.
Rationale for Delay
- The current focus is on enhancing the corporate insolvency resolution process.
- Concerns exist that the cross-border framework might be exploited by Indian defaulters to their advantage in jurisdictions with more lenient bankruptcy laws.
Planned Features of the Frameworks
- Cross-Border Insolvency Framework:
- Based on a model United Nations law.
- Aims to facilitate creditors' access to overseas assets of stressed companies.
- Intended to enable cooperation from foreign countries in insolvency proceedings.
- Individual Insolvency Framework:
- Includes a "fresh-start process" for relieving indebted poor individuals.
