CROSS BORDER INSOLVENCY: A COMPARITIVE STUDY OF INDIAN AND INTERNATIONAL REGULATION

AUTHOR – VIDUSHI SANGANERIA, STUDENT AT AMITY LAW SCHOOL, AMITY UNIVERSITY, NOIDA

BEST CITATION – VIDUSHI SANGANERIA, CROSS BORDER INSOLVENCY: A COMPARITIVE STUDY OF INDIAN AND INTERNATIONAL REGULATION, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (7) OF 2025, PG. 497-508, APIS – 3920 – 0001 & ISSN – 2583-2344

ABSTRACT

Cross-border insolvency, a critical aspect of modern international law, arises when an insolvent debtor has assets or creditors in multiple jurisdictions. This phenomenon has become increasingly relevant due to globalization, which has fostered interconnected economies and international business operations. The complexity of cross-border insolvency stems from the overlapping legal frameworks of different nations, making it challenging to harmonize insolvency proceedings across borders.

Nationally, countries like India have sought to address this issue through the Insolvency and Bankruptcy Code (IBC), 2016, which includes provisions for bilateral cooperation under Sections 234 and 235. However, the absence of a comprehensive framework for cross-border insolvencies remains a significant gap. Internationally, the UNCITRAL Model Law on Cross-Border Insolvency provides a structured approach for cooperation and recognition of foreign insolvency proceedings, though its adoption varies among nations.

Theories such as territorialism, universalism, and hybrid approaches guide the administration of cross-border insolvencies. While territorialism focuses on applying domestic laws within national boundaries, universalism advocates for a unified global regime. Hybrid models, like modified universalism, aim to balance these perspectives by promoting cooperation among jurisdictions while respecting local policies.

The harmonization of cross-border insolvency laws is essential to ensure efficient resolution processes, protect creditors’ rights, and maximize asset value. As global trade continues to expand, developing robust frameworks that address jurisdictional conflicts and facilitate international cooperation remains imperative for managing the complexities of cross-border insolvency effectively.

KEYWORD: Territorialism, Universalism, UNCITRAL Model law, Harmonization, Insolvency