New Delhi:The government on Wednesday sought public comments on the draft norms on cross-border insolvency as part of efforts to put in place a comprehensive legal framework for insolvency cases involving overseas companies.
In a release, the Ministry of Corporate Affairs said it is keen to introduce a globally accepted and well-recognised cross-border insolvency framework, fine-tuned to suit the needs of aspirational Indian economy.
According to the ministry, there is a need to include cross-border insolvency in the Insolvency and Bankruptcy Code (IBC) to provide a comprehensive insolvency framework.
“Global experience demonstrates that cross-border investment decisions and their outcomes, are considerably affected by the insolvency laws in force in a country," it said.
“Inclusion of cross-border insolvency framework will further enhance ease of doing business, provide a mechanism of cooperation between India and other countries in the area of insolvency resolution, and protect creditors in the global scenario," it noted.
Further, the ministry said such a framework would also make India an attractive investment destination for foreign creditors given the increased predictability and certainty of the insolvency framework. Comments on the draft norms can be submitted till 30 June.
Globally, the UNCITRAL (United Nations Commission on International Trade Law) Model Law on Cross-Border Insolvency, 1997 (Model Law) has emerged as the most widely accepted legal framework to deal with cross-border insolvency issues.
Due to the growing prevalence of multinational insolvencies, the Model Law has been adopted by 44 states, including Singapore, the UK and the US, the release said.