Corporate Restructuring, Valuation and Insolvency · Cross Border Insolvency

Cross Border Insolvency under IBC: Sections 234 and 235

Updated 11 October 2026 · Fact-checked

Sections 234 and 235 of the IBC let India deal with assets abroad. Section 234 lets the Central Government make agreements with foreign countries. Section 235 lets a resolution professional, liquidator or bankruptcy trustee ask the Adjudicating Authority to issue a letter of request to a foreign court. It works only where reciprocal arrangements exist.

Understand Cross Border Insolvency under IBC, 2016 (Sections 234 and 235)

A company in insolvency may own assets in other countries, such as a factory, bank balances or shares. An Indian law has no power outside India. So the IBC needs a bridge to reach those assets. Sections 234 and 235 are that bridge.

Section 234 is the enabling section. Under sub-section (1), the Central Government may enter into an agreement with the Government of any country outside India for enforcing the Code. Under sub-section (2), it may notify that the Code's application to assets or property of a corporate debtor or debtor, including a personal guarantor of a corporate debtor, situated in a country with which reciprocal arrangements have been made, is subject to specified conditions.

Section 235 is the working section. It starts with a non obstante clause, so it applies despite anything else in the Code or any other law. During the insolvency resolution process, liquidation or bankruptcy proceedings, the resolution professional, liquidator or bankruptcy trustee may form the opinion that assets are in a country with which reciprocal arrangements have been made under section 234. He then applies to the Adjudicating Authority, saying evidence or action about those assets is required in the process or proceeding.

The Adjudicating Authority must be satisfied that the evidence or action is required. If so, it may issue a letter of request to a court or authority of that country that is competent to deal with the request. The word is 'may', so it is a discretion, not a duty.

Also know the link with section 18. Among the interim resolution professional's duties is taking control and custody of assets the corporate debtor owns, including assets which may be located in a foreign country. But the 'assets' for that section exclude assets of any Indian or foreign subsidiary, and assets held by the debtor under trust or contract, such as bailment. Sections 234 and 235 give the route to act on foreign assets in practice. Currently the Code has only these two sections on cross border insolvency, and they depend on reciprocal arrangements.

Key rules to remember

Section 234(1): Central Government may enter into an agreement with the Government of any country outside India for enforcing the Code; Enabling power. It is the Central Government that acts, not the NCLT or the IP.
Section 234(2): Notification in Official Gazette → Code's application to assets of corporate debtor or debtor (including personal guarantor of a corporate debtor) in a reciprocating country is subject to specified conditions; Applies only to a country with which reciprocal arrangements have been made.
Section 235(1) – who applies: Resolution professional, liquidator or bankruptcy trustee → application to Adjudicating Authority; Applies during CIRP, liquidation or bankruptcy. The IP must hold the opinion that assets are in a reciprocating country.
Section 235(2) – what the Adjudicating Authority does: Satisfied that evidence or action on the assets is required → may issue a letter of request to a competent court or authority of that country; Two tests: the application, and the Adjudicating Authority's satisfaction. The power is discretionary.
Section 18(f)(i) and Explanation: IRP takes control and custody of assets the debtor owns, including those in a foreign country; assets of subsidiaries and third-party trust or bailment assets are excluded; Use it to show the IRP's duty to reach foreign assets, with its limits.

How to solve Cross Border Insolvency under IBC, 2016 (Sections 234 and 235) questions

Use this method for any question on foreign assets of a corporate debtor under the IBC.

1Identify the stage: CIRP, liquidation or bankruptcy. Section 235 operates in all three.
2Identify the applicant: resolution professional, liquidator or bankruptcy trustee. Check he is the right person for the stage.
3Check the precondition: are the assets in a country with which reciprocal arrangements have been made under section 234? If not, section 235 does not help.
4State section 234: the Central Government's power to make agreements and to notify conditions.
5Apply section 235(1): the IP forms an opinion and applies to the Adjudicating Authority, saying evidence or action about the assets is required.
6Apply section 235(2): the Adjudicating Authority must be satisfied, and then may issue a letter of request to a competent court or authority of that country.
7Check section 18 if the question mentions IRP duties or subsidiaries: foreign-owned assets are included, but subsidiary assets are excluded.
8Conclude clearly: say whether the IP can proceed and what the next step is.

Quickest way: Four-line answer for sections 234 and 235

When to use it: Use it when the question is short or when time is tight, and then add facts from the case.

Line 1: Section 234 – Central Government agreements and notified conditions with foreign countries.
Line 2: Reciprocal arrangement with the country where the assets lie is the gateway.
Line 3: Section 235 – RP, liquidator or bankruptcy trustee applies to the Adjudicating Authority; evidence or action on assets is required.
Line 4: Adjudicating Authority, if satisfied, may issue a letter of request to the competent foreign court or authority.

Common mistakes in Cross Border Insolvency under IBC, 2016 (Sections 234 and 235)

Saying the resolution professional directly sends a letter of request to the foreign court.
Students remember the phrase 'letter of request' and skip the application step.
Fix: The IP applies to the Adjudicating Authority. Only the Adjudicating Authority issues the letter.
Ignoring the requirement of reciprocal arrangements.
The sections look like a general power over foreign assets.
Fix: Always state that section 235 works only for a country with which reciprocal arrangements have been made under section 234.
Saying the Adjudicating Authority must issue the letter once the IP applies.
Students read the process as automatic.
Fix: The Adjudicating Authority must be satisfied that evidence or action is required, and then 'may' issue it. It is discretionary.
Leaving out the liquidator and bankruptcy trustee, naming only the RP.
CIRP is the most studied process.
Fix: Section 235 covers resolution professional, liquidator and bankruptcy trustee, across CIRP, liquidation and bankruptcy.
Treating foreign subsidiary assets as the corporate debtor's assets under section 18.
Students read 'foreign country' in section 18(f)(i) and stop there.
Fix: The Explanation to section 18 excludes assets of any Indian or foreign subsidiary and assets held under trust or bailment. Shares held in the subsidiary are different from the subsidiary's own assets.

Worked examples

Example 1

Meridian Steels Ltd is in CIRP. The resolution professional finds that the company owns a warehouse in a country with which India has reciprocal arrangements under section 234. He needs evidence about the warehouse's title. Advise him on the procedure.

Show the solution

Provision: Section 235(1) lets the resolution professional apply to the Adjudicating Authority if he thinks assets are in a country with which reciprocal arrangements have been made under section 234.
Facts: The warehouse is owned by the corporate debtor and is abroad, in a reciprocating country. CIRP is running, so the stage fits. Evidence about title is needed in the process.
Analysis: He should make an application to the Adjudicating Authority, stating that evidence relating to the warehouse is required in connection with the CIRP.
Under section 235(2) the Adjudicating Authority must be satisfied that the evidence or action is required in connection with the process. Then it may issue a letter of request to a court or authority of that country competent to deal with it.
Conclusion: He cannot approach the foreign court directly. The route is an application to the Adjudicating Authority.

Answer: The resolution professional should apply to the Adjudicating Authority under section 235(1). If it is satisfied that the evidence is required for the CIRP, it may issue a letter of request to the competent court or authority of that country under section 235(2).

Example 2

Kaveri Textiles Ltd is in liquidation. The liquidator learns that the company has funds in a bank in Country X. India has no reciprocal arrangement with Country X. Can he use section 235?

Show the solution

Provision: Section 235(1) applies where assets are in a country with which reciprocal arrangements have been made under section 234.
Facts: The liquidator is a proper applicant and liquidation is a covered stage. But no reciprocal arrangement exists with Country X.
Analysis: The precondition is not met. The Adjudicating Authority has no basis in section 235 to issue a letter of request for Country X.
Practical point: The Central Government may enter into an agreement with Country X under section 234(1). Only after an arrangement is in place can the route open. Until then the liquidator must look to other lawful steps.
Conclusion: Section 235 is unavailable at present.

Answer: No. Section 235 operates only for countries with which reciprocal arrangements have been made under section 234. Without one, the liquidator cannot get a letter of request for Country X.

Exam tips

Write the section numbers 234 and 235 with their one-line function. It shows precision.
In case questions, name the applicant, the authority and the foreign court in sequence. The chain is the answer.
Always state the reciprocal arrangement condition and the Adjudicating Authority's satisfaction. Examiners reward these two conditions.
Link section 18(f)(i) when the case talks about the IRP and foreign assets, but mention the subsidiary exclusion.
Do not add UNCITRAL Model Law provisions as part of the Code. Say they are a proposed framework, not in the IBC.

Practice questions from Cross Border Insolvency

Cross Border Insolvency under IBC, 2016 (Sections 234 and 235) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Cross Border Insolvency under IBC, 2016 (Sections 234 and 235): frequently asked questions

What do sections 234 and 235 of the IBC deal with?

They deal with foreign assets in insolvency. Section 234 allows agreements with foreign countries and notified conditions. Section 235 allows a letter of request to a foreign court or authority for evidence or action on assets abroad.

Who can ask for a letter of request under section 235?

The resolution professional, liquidator or bankruptcy trustee. They apply to the Adjudicating Authority during the insolvency resolution process, liquidation or bankruptcy proceedings. They do not write to the foreign court themselves.

Does section 235 apply to every foreign country?

No. It applies only to a country with which reciprocal arrangements have been made under section 234. Without such an arrangement the Adjudicating Authority cannot rely on section 235.

Is the Adjudicating Authority bound to issue the letter of request?

No. It must first be satisfied that evidence or action relating to the assets is required in connection with the process or proceeding. Then it may issue the letter. The word used is 'may'.