Login With Google
UN model on cross-border insolvency
Why is it in the news ?
- A government-appointed Insolvency Law Committee (ILC) has recommended adoption of a United Nations model law for dealing with cross-border insolvency cases under the Insolvency and Bankruptcy Code.
More in the news
- The ILC has recommended the adoption of the UN Commission on International Trade Law (UNCITRAL) Model Law of Cross Border Insolvency.
- UNCITRAL provides for a comprehensive framework to deal with cross-border insolvency issues.
- The UNCITRAL Model Law has been adopted in 44 countries.
- The advantages of the model law are the precedence given to domestic proceedings and protection of public interest.
- While the IBC has been dealing with cases of domestic insolvency, default cases with cross-border implications are currently outside its purview.
- The Code at present does not explicitly provide a framework to deal with the issues of cross-border insolvency.
- The necessity of having such a framework under the IBC arises as many Indian companies have a global presence and many foreign companies have operational across countries including India.
Insolvency and Bankruptcy Code
- For establishing an insolvency regulation related to entities and individuals, the Parliament has enacted Insolvency and Bankruptcy Code 2016.
- The Code offers a uniform, comprehensive insolvency legislation encompassing all companies, partnerships and individuals (other than financial firms).
- It suggests two options – a restructuring if the firm is viable and liquidation if it is not financially viable.
- The Lok Sabha has passed the Insolvency and Bankruptcy Code (Amendment) Bill 2017 to pave the way for tightening loopholes in existing code and to make resolution process more effective.
Source
Indian Express.