MCA panel’s scope on cross-border insolvency gets bigger

The scope of work for the committee constituted to recommend rules and regulatory framework for the smooth implementation of cross-border insolvency provisions under the Insolvency Bankruptcy Code just got bigger.

The Ministry of Corporate Affairs (MCA) has now expanded the terms of reference of this panel headed by retired IAS officer KP Krishnan to cover aspects relating to enterprise group insolvency on a cross-border basis.

This committee, which was constituted in the third week of January this year, will now also study and analyse the Uncitral Model Law for ‘enterprise group insolvency’ and make recommendations in the context of the Insolvency and Bankruptcy Code 2016 (IBC), official sources said.

In January, the MCA had given the panel three months to submit its report. While the panel may firm up its recommendations on rules and the regulatory framework in the coming weeks, indications are that the Centre may not bring amendments to the IBC to introduce cross-border insolvency framework in the ongoing Budget session of Parliament, which is set to conclude on April 3.

The inclusion of the Cross Border Insolvency Chapter in the IBC will be a major step forward and will bring Indian insolvency law on a par with that of matured jurisdictions.

Relevance of Uncitral

It may be recalled that the second report of the Insolvency Laws Committee (ILC) headed by MCA Secretary Injeti Srinivas had, in 2018, recommended the adoption of the Uncitral Model Law of Cross Border Insolvency, 1997, as it provided for a comprehensive framework to deal with cross-border insolvency issues.

The committee has also recommended a few carve-outs to ensure that there is no inconsistency between the domestic insolvency framework and the proposed cross-border insolvency framework.

However, in 2018, the Insolvency Law Committee had proposed a framework for cross-border insolvency that would have enabled the country to deal with Indian companies having foreign assets and vice versa. It did not provide for a framework for dealing with enterprise groups as it was then still a work in progress with Uncitral.

Later, in September 2019, the Uncitral Model Law for enterprise group insolvency was firmed up, and so the MCA has now included this in the terms of reference of the Krishnan-led committee. The members of this committee include Abizer Diwanji, EY India Financial Service; Aparna Ravi, Partner, Samvad Partners; C.S.Shetty, Managing Director, Stressed Assets Resolution Group, SBI; Somasekhar Sundaresan, Advocate; M Unnikrishnan, Chief General Manager, IBBI; and Harshvardhan Raghunath, Partner, Bain & Co.