Cross-Border Insolvency under IBC: Sections 234, 235, 240C

Large Indian companies borrow abroad, own foreign subsidiaries and keep assets overseas, while foreign companies hold assets and creditors in India. When such a company fails, proceedings in one country may clash with those in another, and assets abroad may lie beyond the reach of an Indian resolution professional. The Code began with only skeletal provisions for this. This note explains the original framework, how tribunals improvised in cases such as Jet Airways, the international model, and the rule-making power added in 2026.

1. The Original Provisions

• Section 234(1). The Central Government may enter into an agreement with the government of any country outside India for enforcing the provisions of the Code.
• Section 234(2). The Central Government may, by notification, direct that the Code shall apply to assets or property of a corporate debtor or debtor, including a personal guarantor, situated in a country with which reciprocal arrangements have been made, subject to specified conditions.
• Section 235. Where the resolution professional, liquidator or bankruptcy trustee is of the opinion that assets of the corporate debtor or debtor are situated in a country with which such an agreement exists, he may apply to the NCLT, which may issue a letter of request to a court or authority of that country to deal with the request.
• The gap. India has not concluded such agreements, so the provisions have remained largely unused, and the Code contains no mechanism for recognising foreign insolvency proceedings in India.

Figure 1: The original provisions and the 2026 addition

2. Jet Airways, 2019

• Two proceedings. While a CIRP against Jet Airways was pending in India, a court in the Netherlands had declared it bankrupt at the instance of Dutch creditors and appointed an administrator, who sought recognition of the Dutch proceedings in India.
• NCLT. The NCLT Mumbai refused to take note of the Dutch proceedings, since the Code provides no mechanism for recognition of foreign insolvency proceedings.
• NCLAT. On appeal, the NCLAT, by its order of 26 September 2019, approved a cross-border insolvency protocol agreed between the Indian resolution professional and the Dutch administrator, under which India was treated as the centre of main interests, the Indian CIRP as the main proceeding and the Dutch proceeding as non-main, and the Dutch administrator could attend meetings of the committee of creditors without a vote.
• Significance. The case showed that cooperation was possible, but that it depended on improvisation and the consent of the parties rather than law.

3. Foreign Assets of Indian Groups

In the Videocon insolvency, the NCLT Mumbai in February 2020 treated foreign oil and gas assets held through overseas subsidiaries as assets of the corporate debtor for the purposes of the CIRP. The order was criticised because those subsidiaries were separate companies incorporated under foreign laws, and an Indian order could not by itself bind foreign courts or creditors. Without recognition abroad, an Indian professional's control over foreign assets depends on the cooperation of foreign courts (Topic 63).

Figure 2: Milestones in Indian cross-border insolvency

4. The UNCITRAL Model Law

Figure 3: Principles of the Model Law

• Adoption. The UNCITRAL Model Law on Cross-Border Insolvency, 1997, has been adopted by more than sixty jurisdictions, including the United States, the United Kingdom, Singapore and Japan.
• Access and recognition. Foreign representatives have direct access to local courts and may seek recognition of a foreign proceeding as main, if it is in the debtor's centre of main interests, or non-main, if the debtor only has an establishment there.
• Relief. Recognition of a main proceeding brings an automatic stay on actions against the debtor, and courts may grant further relief in both cases.
• Cooperation. Courts and insolvency representatives of different countries cooperate and communicate directly, and concurrent proceedings are coordinated.
• Public policy. A court may refuse an action under the Model Law if it would be manifestly contrary to its public policy.

5. Reform Proposals and Section 240C

• Insolvency Law Committee, 2018. Recommended adopting the Model Law for corporate debtors through a new Part Z of the Code, with modifications suited to India; a later committee reported on detailed rules in 2021, but the draft was not enacted.
• Section 240C, 2026. The IBC (Amendment) Act, 2026 inserted section 240C, empowering the Central Government to make rules, laid before Parliament, for insolvency matters involving cross-border elements, including recognition of foreign proceedings, relief, and cooperation and coordination with foreign courts, for notified classes of debtors and jurisdictions.
• Status. The cross-border provisions were among those excluded when the Amendment came into force on 26 May 2026, and as of the IBBI's April to June 2026 newsletter they had not been notified.
• Approach. By choosing rules rather than enacting the Model Law in the Code, Parliament left the scope, the forum and any reciprocity conditions to be settled by the Central Government.

6. Frequently Asked Questions

Can a foreign insolvency administrator ask the NCLT to recognise a foreign proceeding?

The Code contains no mechanism for recognition. In Jet Airways, the NCLT refused recognition, and cooperation was achieved only through a protocol approved by the NCLAT. Rules under section 240C may provide for recognition once notified.

How can an Indian resolution professional reach assets of the corporate debtor abroad?

Under section 235, by applying to the NCLT for a letter of request to a foreign court, but only where India has an agreement with that country under section 234. Otherwise, the professional must seek recognition under the foreign country's own law.

What is the centre of main interests?

The place where the debtor conducts the administration of its interests on a regular basis, ascertainable by third parties, usually presumed to be its registered office. Under the Model Law, it determines which proceeding is the main proceeding.

7. Related Topics

• Topic 45: Implementation and Failure of Plans. Jet Airways after resolution.
• Topic 63: Group Insolvency. Section 59A and Videocon.
• Topic 94: Amendments 2017 to 2026. The reform timeline.