Corporate Restructuring, Valuation and Insolvency · Cross Border Insolvency

Insolvency Law Committee Report and Draft Part Z for India

Updated 11 October 2026 · Fact-checked

The Insolvency Law Committee's 2018 report on cross border insolvency recommended that India adopt the UNCITRAL Model Law on Cross-Border Insolvency, 1997, with modifications, as a new Part Z of the IBC. It would let foreign representatives approach the NCLT, seek recognition of foreign proceedings, and obtain relief and cooperation, starting with corporate debtors.

Understand Insolvency Law Committee Report and Proposed Framework for India

Start with the gap. The IBC, 2016 deals mainly with a debtor's assets and creditors in India. Sections 234 and 235 only allow the Central Government to enter bilateral agreements and the Adjudicating Authority to issue letters of request to foreign courts. They do not give a foreign liquidator or administrator a clear route into an Indian court, and they do not give a clear route for recognising a foreign proceeding.

To fill this gap, the Insolvency Law Committee (ILC), set up by the Ministry of Corporate Affairs, studied cross border insolvency and submitted a report in 2018. Its main recommendation was that India should adopt the UNCITRAL Model Law on Cross-Border Insolvency, 1997, with changes to suit Indian law. It proposed placing the framework in the IBC as a separate part, called Part Z, with a draft text.

The Model Law rests on four ideas: access (a foreign representative can go directly to an Indian forum), recognition (a foreign proceeding is recognised as a main or non-main proceeding), relief (interim and final relief once recognised) and cooperation and coordination (between Indian and foreign courts and insolvency professionals, including concurrent proceedings). A foreign proceeding is a main proceeding if it is in the State where the debtor has its centre of main interests (COMI). It is a non-main proceeding if the debtor only has an establishment there. Unless proved otherwise, the registered office is presumed to be the COMI.

The ILC chose to apply the framework first to corporate debtors, including corporate guarantors, and to keep other debtors for later. It kept the public policy exception, so an Indian forum can refuse an action that is manifestly contrary to India's public policy. In the draft, the NCLT is the forum for corporate persons. The ILC also left insolvency of corporate groups for a later stage.

Treat this topic as a proposed framework. Your study material is the final authority on what the Part Z draft contains and on its current status. In the exam, link the problem (the IBC's gap), the recommendation (Model Law as Part Z), the features, and the limits.

Key rules to remember

Core recommendation: UNCITRAL Model Law, 1997 (with modifications) → new Part Z in the IBC; The ILC chose adoption of the Model Law over relying only on sections 234 and 235.
Four pillars of the Model Law: Access + Recognition + Relief + Cooperation and coordination; Use these as headings when you describe the draft Part Z.
Main proceeding: Foreign proceeding in the State of the debtor's COMI; Registered office is presumed to be the COMI in the absence of proof to the contrary.
Non-main proceeding: Foreign proceeding in a State where the debtor has only an establishment; Gets recognition, but the relief available differs from that for a main proceeding.
Scope in the ILC proposal: Corporate debtors (including corporate guarantors) first; others later; Do not say the draft covers individuals or corporate groups at the start.
Safeguard: Public policy exception; An Indian forum may decline an action that is manifestly contrary to India's public policy.

How to solve Insolvency Law Committee Report and Proposed Framework for India questions

Use this order for any question on the ILC report or draft Part Z. It works for theory questions and for case-based questions.

1Identify the issue: is the question about why India needs a framework, what the ILC recommended, or how a foreign proceeding would be treated?
2State the gap in the present law: the IBC has only sections 234 and 235, which depend on bilateral agreements and letters of request.
3State the recommendation: adopt the UNCITRAL Model Law, 1997, with modifications, as Part Z of the IBC.
4Apply the features to the facts: who is the foreign representative, where is the COMI, and is the proceeding main or non-main?
5Name the consequence: direct access to the NCLT, recognition, relief, and cooperation with the foreign court or professional.
6Check the limits: corporate debtors only at first, public policy exception, and groups left for later.
7Conclude clearly: say whether recognition and relief would be available and state the practical compliance point, such as the application to the NCLT with proof of the foreign proceeding.

Quickest way: Four-pillar answer frame

When to use it: Use it for short notes and 'discuss the recommendations' questions when you have about 8 to 10 minutes.

Write one line on the gap: sections 234 and 235 only, no recognition route.
Write one line on the recommendation: Model Law, 1997, as Part Z, with modifications.
List access, recognition, relief and cooperation with one line each.
Add main and non-main proceedings with the COMI presumption.
Close with the scope limit (corporate debtors first) and the public policy exception.

Common mistakes in Insolvency Law Committee Report and Proposed Framework for India

Saying the Model Law was adopted as it is, with no changes.
Students remember 'adoption of the Model Law' and drop the words 'with modifications'.
Fix: Write that the ILC recommended adoption with suitable modifications, such as the choice of forum and the initial scope.
Saying Part Z applies to all debtors, including individuals and corporate groups, from the start.
Students assume the Model Law is universal in scope.
Fix: State that the ILC proposed corporate debtors first (including corporate guarantors) and left other categories and group insolvency for later.
Confusing sections 234 and 235 with Part Z.
Both deal with cross border matters, so they get mixed up.
Fix: Sections 234 and 235 are in the Code now and rely on bilateral agreements and letters of request. Part Z is the proposed framework that would add recognition and relief.
Treating any foreign proceeding as a main proceeding.
Students ignore the COMI test.
Fix: Check where the debtor's COMI lies. A foreign proceeding is main only if it is in the State of the COMI. Otherwise it is non-main, if the debtor has an establishment there.
Forgetting the public policy exception.
Students focus on the benefits of recognition and relief.
Fix: Always add that an Indian forum can refuse action that is manifestly contrary to India's public policy.
Stating the draft as if it were in force law.
The word 'Part Z' sounds like an existing part of the Code.
Fix: Use words such as 'recommended', 'proposed' and 'draft'. Check the current status in your study material.

Worked examples

Example 1

Discuss the recommendations of the Insolvency Law Committee on cross border insolvency and the main features of the draft Part Z.

Show the solution

Gap: the IBC has only sections 234 and 235. These depend on bilateral agreements and letters of request, and give no clear route for recognising foreign proceedings.
Recommendation: the ILC recommended adopting the UNCITRAL Model Law on Cross-Border Insolvency, 1997, with modifications, as a separate Part Z of the IBC.
Access: a foreign representative can apply directly to the NCLT, which is the forum for corporate persons.
Recognition: a foreign proceeding is recognised as a main proceeding (in the State of the COMI, presumed to be the registered office) or a non-main proceeding (where there is an establishment).
Relief and cooperation: recognition brings relief, and the draft provides for cooperation between Indian and foreign courts and professionals, and for coordination of concurrent proceedings.
Scope and safeguards: corporate debtors, including corporate guarantors, come first, and group insolvency is left for later. The public policy exception is retained.

Answer: The ILC recommended adopting the UNCITRAL Model Law, 1997, with modifications, as Part Z of the IBC. It would give foreign representatives access to the NCLT, recognition of main and non-main proceedings, relief, and cooperation and coordination. It would apply first to corporate debtors, and it keeps the public policy exception.

Example 2

Bharat Textiles Ltd has its registered office in Mumbai but runs no business there. All its operations, management and bank accounts are in Dubai. A Dubai court has started a liquidation proceeding and appointed a liquidator, who wants recognition in India because the company owns a factory in Gujarat. Advise how the proposed Part Z would treat this.

Show the solution

Issue: can the foreign liquidator get recognition in India, and is the Dubai proceeding a main or non-main proceeding?
Access: under the proposed framework the foreign representative can apply directly to the NCLT. The liquidator should file with proof of the Dubai proceeding and his appointment.
COMI: the registered office (Mumbai) is only a presumption of the COMI. It can be rebutted. Operations, management and banking in Dubai suggest the real COMI is Dubai.
Classification: if the NCLT finds the COMI is in Dubai, the Dubai proceeding is a foreign main proceeding. If the NCLT finds the COMI is in India, it would not be a main proceeding, and at best it could be a non-main proceeding if the company has an establishment in Dubai.
Relief and safeguard: on recognition, relief can be given in respect of the Gujarat factory, and the NCLT can cooperate with the Dubai court. The NCLT may refuse any step manifestly contrary to Indian public policy.
Practical point: the liquidator must rebut the registered office presumption with evidence, such as management records and bank accounts.

Answer: The Dubai liquidator can apply to the NCLT under the proposed Part Z. If he rebuts the registered office presumption and proves the COMI is Dubai, the Dubai proceeding is recognised as a foreign main proceeding and relief and cooperation follow, subject to the public policy exception.

Exam tips

Write 'recommended' and 'proposed' when describing Part Z. Marks are lost when the draft is described as existing law.
Use the four-pillar frame (access, recognition, relief, cooperation) as your headings. It makes a long answer easy to mark.
In case questions, decide the COMI first. Everything else, such as main or non-main status, depends on it.
Mention sections 234 and 235 in one line as the existing position, then show how Part Z improves on it.
End every answer with the limits: corporate debtors first and the public policy exception.

Practice questions from Cross Border Insolvency

Insolvency Law Committee Report and Proposed Framework for India in other exams

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

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Insolvency Law Committee Report and Proposed Framework for India: frequently asked questions

What did the Insolvency Law Committee recommend on cross border insolvency?

It recommended that India adopt the UNCITRAL Model Law on Cross-Border Insolvency, 1997, with suitable modifications. The framework would be placed in the IBC as a separate Part Z, and a draft text was prepared. It would apply first to corporate debtors.

What is draft Part Z of the IBC?

It is the proposed set of provisions to bring the Model Law into the IBC. It deals with access of foreign representatives to the NCLT, recognition of foreign proceedings, relief, and cooperation and coordination with foreign courts and professionals.

How is Part Z different from sections 234 and 235 of the IBC?

Sections 234 and 235 allow bilateral agreements with other countries and letters of request to foreign courts. They do not provide a general route for recognising foreign proceedings. Part Z would provide that route through the Model Law.

What is the centre of main interests and why does it matter?

The centre of main interests (COMI) is the place where the debtor's main affairs are conducted. A foreign proceeding in that State is a main proceeding. The registered office is presumed to be the COMI unless there is proof to the contrary.