The Centre is actively pursuing the legislation to bring cross-border insolvency instances under the purview of the existing Insolvency and Bankruptcy Code (IBC). The Union Minister of State for Corporate Affairs, Rao Inderjit Singh stated that the government is now looking at the cross-border insolvency processes and the discussions are on with the expert group.

"This (cross border insolvency process) is something that the government has put on the anvil and we will have help from all intellectuals to decide as to the best course to go about it," said Singh indicating that the IBC may have suitable changes to incorporate the new requirements.

"A lot of people have invested either from outside or vice-versa. We need to find a way to address these issues as well. The issue is under discussion. And we will take a final call once we have all the inputs from all the intellectuals," said the Minister on the sidelines of the inauguration of two-day International Research Conference on Insolvency and Bankruptcy at Indian Institute of Management-Ahmedabad (IIM-A).

Notably, the Union Finance Minister Nirmala Sitharaman in her Union Budget speech in February 2022 had stated that the government had proposed changes in the IBC to enable cross-border insolvency and dispute resolution.

In 2020, the Union Ministry of Corporate Affairs had formed a Cross Border Insolvency Rules/Regulations Committee (CBIRC) which had retired bureaucrat KP Krishnan as its Chairman, representatives from the government of India's Department of Economic Affairs, State Bank of India, global consultant major Bain & Co, E&Y India, practicing advocates and the representative of Insolvency and Bankruptcy Board of India (IBBI).

On the issue of wilful defaulters, the Minister refrained from commenting, but stated that the government is looking to evolve a code that would cater to the interest of both the creditors and the debtors.

"The big achievement for the defaulting companies, is that the IBC allows these companies to settle their disputes with creditors outside the tribunals. The higher percentage of work (dispute settlement) that is being done by the IBC is done outside the NCLT," said the Minister.

Need for framework

Meanwhile, Rajesh Verma, Secretary, Ministry of Corporate Affairs underlined the need for having a framework to study the impact of the insolvency law. The IBC has so far undergone six amendments since its enforcement in 2016.

"It is crucial to continue to study the impact of the insolvency framework created by IBC and conduct a SWOT analysis to investigate the strengths and weaknesses of the Code," Verma said, addressing the gathering of the finance and corporate professionals at the inaugural session of the conference.

Ravi Mital, IBBI Chairperson noted that the instances of liquidation are large as the stressed projects get referred to IBC process late. "We will examine how to encourage resolution of stressed projects more than liquidation. The basic essence of IBC is to resolve a project as a going concern," Mital said.