Insolvency and Bankruptcy - Law and Practice · Cross Border Insolvency (Elective 7.5)

Cross Border Insolvency under IBC 2016: Sections 234 and 235

Updated 11 October 2026 · Fact-checked

Sections 234 and 235 of the IBC deal with assets outside India. Section 234 lets the Central Government enter agreements with foreign countries and notify reciprocal arrangements. Section 235 lets a resolution professional, liquidator or bankruptcy trustee apply to the Adjudicating Authority, which may issue a letter of request to a foreign court or authority.

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

A company in insolvency may own assets abroad: a factory, bank balances, or shares in a foreign firm. An Indian tribunal has no direct power over those assets. A foreign court is not bound to obey an Indian order. The IBC therefore needs a bridge.

The IBC gives a limited bridge in two sections. Section 234 is the enabling provision. The Central Government may enter into an agreement with the Government of any country outside India for enforcing the Code. It may also notify that the Code's application to assets or property of the 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 provision. It applies in the course of the insolvency resolution process, liquidation or bankruptcy proceedings. If the resolution professional, liquidator or bankruptcy trustee thinks assets are situated in a country with which reciprocal arrangements have been made under section 234, he may apply to the Adjudicating Authority. The application says that evidence or action relating to those assets is required for the process or proceeding.

The Adjudicating Authority must be satisfied that such evidence or action is required. Then it may issue a letter of request to a court or authority of that country competent to deal with the request. The word is "may", so issuing it is discretionary.

Keep the limits in mind. These two sections are not a full cross-border regime like the UNCITRAL Model Law. They work only with countries that have reciprocal arrangements. They do not by themselves provide for recognition of foreign proceedings or for coordination of concurrent proceedings. Section 18(f)(i) also supports the picture: the interim resolution professional must take control and custody of assets the corporate debtor owns, including those which may be located in a foreign country. The Explanation to section 18 excludes assets of any Indian or foreign subsidiary of the corporate debtor.

Key rules to remember

Section 234(1): agreements: Central Government + Government of a foreign country → agreement for enforcing the Code; The power sits with the Central Government, not with the NCLT or the resolution professional.
Section 234(2): reciprocal arrangements: Notification in Official Gazette → application of the Code to assets abroad is subject to specified conditions; Covers assets of a corporate debtor or debtor, including a personal guarantor of a corporate debtor, in a country with reciprocal arrangements.
Section 235(1): who applies and why: RP / liquidator / bankruptcy trustee → application to Adjudicating Authority; Requires the applicant's opinion that assets are in a country with reciprocal arrangements under section 234, and that evidence or action about them is required.
Section 235(2): the letter of request: Adjudicating Authority satisfied → may issue letter of request to a competent foreign court or authority; Discretionary. The tribunal must be satisfied that evidence or action is required in the process or proceeding.
Section 18(f)(i): foreign assets of the debtor: IRP takes control and custody of assets owned by the corporate debtor, including those located in a foreign country; Assets of any Indian or foreign subsidiary are excluded by the Explanation.

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

Use this order for any case-based question on assets outside India. Provision first, then facts, then conclusion.

1Identify the stage: insolvency resolution process, liquidation or bankruptcy. Section 235 applies to all three.
2Identify the applicant. Only a resolution professional, liquidator or bankruptcy trustee can apply under section 235.
3Check the country. Has the Central Government entered a section 234 agreement or notified reciprocal arrangements with it? If not stated, say the route depends on it.
4Check the purpose: evidence or action relating to assets abroad must be required in connection with the process or proceeding.
5State the forum: the application goes to the Adjudicating Authority, which must be satisfied before acting.
6Conclude: the Adjudicating Authority may issue a letter of request to a competent court or authority of that country.
7Add practical points: collect proof of the foreign assets, draft the application with facts, and note that the foreign court then deals with the request under its own law.

Quickest way: Four-question check for sections 234 and 235

When to use it: Use it when the question is short or when you are short of time.

Who applies? RP, liquidator or bankruptcy trustee.
Where are the assets? Outside India, in a country with reciprocal arrangements under section 234.
To whom? The Adjudicating Authority.
What results? A letter of request to a competent foreign court or authority, if the tribunal is satisfied.

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

Saying section 235 applies to any foreign country.
Students remember "assets abroad" and forget the condition.
Fix: Always write that the country must have reciprocal arrangements made under section 234.
Saying the Adjudicating Authority or the creditors enter the agreement with a foreign country.
Confusion between the two sections.
Fix: Section 234 power belongs to the Central Government. Section 235 is the tribunal's power on application.
Writing that the Adjudicating Authority must issue the letter of request.
Students assume an application is always granted.
Fix: The text says it may issue, after being satisfied that evidence or action is required.
Forgetting that section 235 covers liquidation and bankruptcy too.
Students link cross border issues only with the CIRP.
Fix: Name the applicants: resolution professional, liquidator or bankruptcy trustee.
Presenting sections 234 and 235 as a full Model Law framework.
The chapter also covers UNCITRAL, so the ideas get mixed.
Fix: Say these sections are limited. They do not provide for recognition of foreign proceedings or for coordinating concurrent proceedings.

Worked examples

Example 1

Bharat Textiles Ltd is in CIRP. The resolution professional finds that it owns a warehouse in a country with which India has notified reciprocal arrangements under section 234. He needs title documents and wants action on the warehouse. What can he do?

Show the solution

Provision: section 235(1) lets the resolution professional apply to the Adjudicating Authority when he thinks assets are in a country with reciprocal arrangements under section 234.
Facts: the country has notified reciprocal arrangements, and evidence and action on the warehouse are required for the CIRP.
Procedure: he files an application before the Adjudicating Authority stating these facts, with supporting documents.
Under section 235(2), if satisfied that evidence or action is required, the Adjudicating Authority may issue a letter of request to a competent court or authority of that country.

Answer: He should apply to the Adjudicating Authority under section 235(1). If it is satisfied, it may issue a letter of request to a competent court or authority of that country.

Example 2

Sundaram Metals Ltd is in liquidation. The liquidator learns it has bank deposits in a country with which India has no agreement or reciprocal arrangement. Can he use section 235?

Show the solution

Provision: section 235(1) applies only if the assets are in a country with which reciprocal arrangements have been made under section 234.
Facts: no agreement or reciprocal arrangement exists with that country.
Analysis: the condition is not met, so section 235 cannot be invoked for a letter of request.
Practical point: the liquidator may ask whether the Central Government has entered or notified any arrangement. Without one, recovery depends on other legal steps available under the foreign country's law.

Answer: No. Section 235 is available only for countries with reciprocal arrangements under section 234, so the liquidator cannot seek a letter of request here.

Exam tips

Quote the conditions exactly: reciprocal arrangements under section 234, evidence or action required, tribunal satisfied.
Name the three applicants and the three proceedings, as questions often test them.
In case-based answers, use the order provision, facts, conclusion, and say whether the country condition is met.
Keep a short line that the sections are limited, then link to the UNCITRAL Model Law if the question asks about gaps.

Practice questions from Cross Border Insolvency (Elective 7.5)

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 is the difference between section 234 and section 235 IBC?

Section 234 lets the Central Government enter agreements with foreign governments and notify reciprocal arrangements. Section 235 lets the resolution professional, liquidator or bankruptcy trustee apply to the Adjudicating Authority for a letter of request to a foreign court or authority.

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

The resolution professional, liquidator or bankruptcy trustee, as the case may be. The application goes to the Adjudicating Authority.

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

No. It may issue one only after it is satisfied that evidence or action relating to the foreign assets is required in connection with the process or proceeding.

Does the IBC give full cross border insolvency recognition?

Not through sections 234 and 235. They give an enabling route based on reciprocal arrangements and letters of request. They do not set out a full framework such as the UNCITRAL Model Law.