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

Insolvency Law Committee Report and Proposed Cross Border Framework for India

Updated 11 October 2026 · Fact-checked

The Insolvency Law Committee, in its 2018 report on cross border insolvency, recommended that India adopt the UNCITRAL Model Law through a new Part Z in the IBC. It proposed a phased approach, with the Model Law applying to corporate debtors first. You answer questions by stating the recommendation, its reasons and the safeguards.

Understand Insolvency Law Committee Report and Proposed Framework for India

Sections 234 and 235 of the IBC let India enter reciprocal agreements with other countries and let the Adjudicating Authority issue letters of request for assets abroad. They are thin. They do not say how a foreign insolvency proceeding is recognised in India or how courts of two countries cooperate. This gap is the starting point of the topic.

The Central Government set up the Insolvency Law Committee to review the Code. It examined cross border insolvency and submitted a separate 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. The reasons were predictability for foreign creditors and investors, protection of Indian assets, and cooperation between courts.

The Committee proposed that the Model Law be added to the Code as a new Part Z, with a schedule containing the adapted text. The Model Law covers four core ideas: access for foreign representatives to Indian courts, recognition of foreign proceedings as main or non-main, relief to protect assets, and cooperation and coordination between courts and with concurrent proceedings.

The Committee recommended a cautious approach. It suggested that the framework apply first to corporate debtors, including those undergoing insolvency resolution, liquidation or voluntary liquidation. Individuals and partnership firms would be left out for the time being. It also suggested excluding certain entities, such as banks and insurers, which are governed by special regimes. The Model Law would also keep a public policy exception, so that Indian courts could refuse recognition that would offend India's basic policy.

The Committee also looked at group insolvency and said it needed separate study. Later developments followed. A draft Part Z was released for public comments by the Ministry of Corporate Affairs in 2020, but Part Z has not been enacted. The Insolvency Law Committee's work is therefore a proposed framework, and in your answer you should say clearly that it is not yet law. Check the latest position before the exam, as the position may change.

Key rules to remember

Existing statutory provisions: Section 234 = agreements with foreign countries; Section 235 = letter of request to a country outside India; These are the only cross border provisions in the Code now. Part Z is a proposal.
Source of the proposal: Insolvency Law Committee (2018 report) → adopt UNCITRAL Model Law, 1997 → new Part Z in the IBC; Use this chain as the opening line of your answer.
Four pillars of the Model Law: Access + Recognition + Relief + Cooperation and coordination; Add the main and non-main proceeding distinction under recognition.
Scope recommended by the Committee: Phase 1: corporate debtors only; individuals and firms left out for now; Also mention exclusions of specially regulated entities and the public policy exception.

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

Use this order for any question on the Committee report or Part Z.

1Identify the question: is it asking for the recommendation, the reasons, the structure of Part Z, or a view on whether India should adopt it?
2State the gap first: Sections 234 and 235 are limited and give no recognition mechanism.
3State the Committee's main recommendation: adopt the UNCITRAL Model Law, 1997, as Part Z with a schedule.
4List the framework: access, recognition (main and non-main), relief, cooperation and coordination.
5Add the safeguards: the phased approach to corporate debtors, exclusions, and the public policy exception.
6Mention later developments: the draft Part Z released for comments, and that it is not yet enacted.
7Conclude with a short view: benefits such as certainty for investors, against concerns such as protecting domestic creditors.

Quickest way: Gap, Recommendation, Safeguards, Status

When to use it: Use it for short notes or when time is tight.

Gap: Sections 234 and 235 only.
Recommendation: Model Law as Part Z.
Safeguards: corporate debtors first, public policy exception.
Status: draft Part Z, not enacted.
Close with one line on benefit and one on risk.

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

Writing that Part Z is already part of the IBC.
Students see the recommendation and assume it became law.
Fix: Always call it a proposed or draft framework, and say it has not been enacted.
Confusing the Insolvency Law Committee with the Bankruptcy Law Reforms Committee.
Both names are similar and both reported on the Code.
Fix: Link the 2018 cross border report and Part Z to the Insolvency Law Committee.
Saying the Committee proposed the Model Law for individuals as well.
Students assume a Model Law covers every debtor.
Fix: State the phased approach: corporate debtors first, others later.
Omitting the public policy exception.
Students focus only on recognition and relief.
Fix: Include it as the safeguard that lets an Indian court refuse recognition that offends India's basic policy.
Treating Sections 234 and 235 as a complete cross border regime.
They are the only cross border sections students remember.
Fix: Describe them as limited enabling provisions and explain what they leave out.

Worked examples

Example 1

Explain why the Insolvency Law Committee recommended a new framework for cross border insolvency and what it recommended.

Show the solution

Start with the existing position: Sections 234 and 235 allow reciprocal agreements and letters of request.
Point out the gap: there is no process to recognise a foreign proceeding or for courts to cooperate.
State the recommendation: adopt the UNCITRAL Model Law, 1997, as Part Z with a schedule.
Explain the core features: access, recognition as main or non-main, relief and cooperation.
Add the cautious design: corporate debtors first and a public policy exception.

Answer: The Committee found the Code's two sections inadequate and recommended adopting the Model Law, with adaptations, as Part Z. It gives foreign representatives access, provides recognition and relief, and promotes cooperation, while protecting Indian interests through a phased scope and a public policy exception.

Example 2

A foreign liquidator of a company incorporated abroad seeks to deal with its assets in India. Assuming Part Z were in force as proposed, how would the framework help, and what is the present position?

Show the solution

Identify the party: the foreign liquidator would be a foreign representative.
Under the proposed framework, the representative could apply to the Indian Adjudicating Authority for recognition of the foreign proceeding.
The authority would decide whether the proceeding is a main or non-main proceeding.
After recognition, relief could be given to protect the assets, and courts could cooperate.
The authority could refuse recognition if it offended India's public policy.
Present position: Part Z is a draft, so the representative cannot rely on it. Only Sections 234 and 235 and the general law apply.

Answer: Under Part Z the representative could seek recognition and relief in an orderly way. Since Part Z is not enacted, the current position rests on Sections 234 and 235 and general law.

Exam tips

Open with the gap in Sections 234 and 235, then the recommendation. Examiners reward this structure.
Always say whether a point is a proposal or existing law. A one-line status note earns marks.
Name the four pillars and the main and non-main distinction in any long answer.
In a case-based question, give the provision, apply it to the facts, and then state the conclusion, noting that Part Z is not yet enacted.
Keep a brief balanced view ready: certainty for investors versus protection of domestic creditors.

Practice questions from Cross Border Insolvency (Elective 7.5)

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.

ACCA Applied SkillsCorporate Insolvency Basics and Insolvency Tests

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 adopting the UNCITRAL Model Law on Cross-Border Insolvency, 1997, with adaptations. It proposed placing it in the IBC as a new Part Z. The approach was phased, starting with corporate debtors.

What is draft Part Z of the IBC?

It is a proposed addition to the Code that would carry the adapted Model Law. It would cover access, recognition, relief and cooperation between courts. A draft was released for public comments, but it has not been enacted.

Is the UNCITRAL Model Law in force in India?

No. India has not enacted it. Only Sections 234 and 235 of the IBC deal with cross border matters now.

Does Part Z apply to individuals?

The Committee recommended starting with corporate debtors. Individuals and partnership firms were to be considered later.