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

Recognition and Relief under the Model Law on Cross Border Insolvency

Updated 11 October 2026 · Fact-checked

Under the UNCITRAL Model Law, a foreign representative applies directly to a local court to recognise a foreign insolvency proceeding as main or non-main. On recognition, the court grants automatic or discretionary relief, such as a stay, and courts and representatives cooperate. Answer by stating access, recognition, relief, then cooperation, and apply each to the facts.

Understand Recognition and Relief under the Model Law

A company can fail with assets and creditors in several countries. A court in one country has no power over assets in another. The UNCITRAL Model Law on Cross-Border Insolvency is a template that countries adopt in their own law. It gives a simple route for foreign insolvency proceedings to be recognised and helped locally.

India has not enacted the Model Law. The IBC, 2016 has only two cross-border provisions, sections 234 and 235. Under section 235, if a resolution professional, liquidator or bankruptcy trustee believes assets of the debtor are in a country with which India has a reciprocal arrangement under section 234, he may apply to the Adjudicating Authority. The Adjudicating Authority, if satisfied that evidence or action relating to those assets is required, may issue a letter of request to a court or authority of that country. The Model Law, and the framework proposed by the Insolvency Law Committee, are what you study to see what a fuller regime would look like. Write them as the Model Law position, not as current Indian law.

The Model Law works in four blocks. Access: a foreign representative (the person authorised in the foreign proceeding to administer the debtor's affairs) may apply directly to a local court and may start a local proceeding, without licences or diplomatic channels. Foreign creditors get the same access and the same ranking as local creditors, with some limited exceptions.

Recognition: the representative applies with proof, such as a certified copy of the decision opening the foreign proceeding and appointing the representative. The court recognises the foreign proceeding as a foreign main proceeding if it is pending in the country where the debtor has its centre of main interests (COMI). It is a foreign non-main proceeding if the debtor only has an establishment there. The Model Law presumes that the registered office is the COMI, unless the contrary is proved. A proceeding that fits neither is not recognised. The court may refuse relief if it is manifestly contrary to public policy.

Relief and cooperation: between application and decision, the court may grant urgent interim relief. On recognition of a main proceeding, a stay of individual actions and of execution against assets, and a suspension of the right to transfer assets, follow automatically. Other relief, such as examining witnesses or entrusting asset realisation to the foreign representative, is discretionary. For a non-main proceeding, all relief is discretionary. Courts and representatives must cooperate and may coordinate hearings. Where a local proceeding runs at the same time, relief must be consistent with it.

Key rules to remember

Foreign main proceeding: Foreign main proceeding = proceeding in the State where the debtor's COMI is located; The registered office is presumed to be the COMI, in the absence of proof to the contrary.
Foreign non-main proceeding: Foreign non-main proceeding = proceeding in a State where the debtor has an establishment (not COMI); Relief is discretionary only. The relief must relate to assets that should be administered in that proceeding.
Effects of recognising a main proceeding: Recognition of main proceeding → stay of actions and execution + suspension of right to transfer assets; These effects are automatic. They are subject to the exceptions and limits of local law. Further relief is discretionary.
Order of steps: Access → Application → Recognition → Relief → Cooperation; Use this as a skeleton for any answer.
Indian provision today: IBC s.235: application by RP, liquidator or trustee → AA satisfied → letter of request to foreign court; It works only for countries with reciprocal arrangements under s.234. It is outbound and does not cover recognition of foreign proceedings in India.

How to solve Recognition and Relief under the Model Law questions

Use this method for case-based questions on a foreign insolvency proceeding and its effect locally.

1Identify who is acting. Is it a foreign representative seeking help in a local court, or an Indian professional seeking help abroad?
2State access: the foreign representative may apply directly to the local court, and foreign creditors have equal access.
3Fix the COMI from the facts, starting with the registered office presumption, and decide whether the proceeding is main, non-main or neither.
4List the documents needed for recognition, such as the certified decision opening the proceeding and appointing the representative.
5State the relief: interim relief before recognition, automatic stay and suspension on a main proceeding, discretionary relief otherwise.
6Check limits: public policy exception, and any local proceeding that already exists.
7Add cooperation between courts and representatives, and coordination of concurrent proceedings.
8Conclude with the result. If India is involved, say that India has only sections 234 and 235 and has not adopted the Model Law.

Quickest way: COMI-first method

When to use it: Use when a case gives facts about where a debtor is based and asks what a court will do.

Find the COMI from the facts, noting the registered office presumption.
Label the foreign proceeding as main, non-main or neither.
Write the relief: automatic for main, discretionary for non-main.
Close with a line on cooperation and, for India, on sections 234 and 235.

Common mistakes in Recognition and Relief under the Model Law

Saying that India has adopted the Model Law and that foreign proceedings are recognised under the IBC.
Students mix up the Model Law with the Insolvency Law Committee's proposed framework.
Fix: State that the IBC has only sections 234 and 235 and that the Model Law is the proposed approach.
Treating the registered office as the conclusive COMI.
The presumption is remembered but its rebuttable nature is forgotten.
Fix: Say it is a presumption, and test it against the facts of where the debtor actually runs its business.
Giving automatic stay for a non-main proceeding.
Students mix the two types of recognition.
Fix: Remember that automatic effects attach only to main proceedings. Non-main relief is discretionary.
Confusing a letter of request under section 235 with recognition of a foreign proceeding.
Both concern cross-border help.
Fix: A section 235 letter of request is an Indian request for evidence or action abroad, and it needs a reciprocal arrangement under section 234.
Forgetting who can apply under section 235.
Students write only 'the creditor' or 'the court'.
Fix: The resolution professional, liquidator or bankruptcy trustee applies to the Adjudicating Authority, which issues the letter of request if satisfied.
Leaving out the public policy exception.
Students focus on the benefits of recognition only.
Fix: Add that a court may refuse an action that is manifestly contrary to public policy.

Worked examples

Example 1

Zenith Textiles Ltd, registered in Singapore with all its management and factories in Singapore, has a liquidation order in Singapore. The liquidator wants to stop a creditor from enforcing a decree against Zenith's warehouse stock in a country that has adopted the Model Law. Advise on the procedure and relief.

Show the solution

The liquidator is a foreign representative. He may apply directly to the local court and does not need to go through diplomatic channels.
He should file a certified copy of the liquidation order showing he has been authorised to administer the debtor's affairs.
The COMI is presumed to be at the registered office, Singapore. The facts of management and factories in Singapore confirm this.
The Singapore liquidation is therefore a foreign main proceeding.
On recognition, the stay of individual actions and execution against Zenith's assets and the suspension of the right to transfer assets apply automatically, subject to local law limits.
He may ask for interim relief, such as a stay on the decree, while recognition is pending.
Further relief, such as entrusting the stock's realisation to him, is discretionary.

Answer: The liquidator applies directly to the local court. The Singapore liquidation is a foreign main proceeding, so the stay on enforcement follows automatically on recognition, and interim relief is available meanwhile.

Example 2

Aarav Pharma Ltd, an Indian company in CIRP, believes it has bank deposits in a foreign country. The resolution professional wants the foreign court's help to trace them. What can he do under the IBC?

Show the solution

Section 235 allows the resolution professional to act if he thinks the debtor's assets are in a country outside India.
The country must be one with which reciprocal arrangements have been made under section 234.
He applies to the Adjudicating Authority, saying that evidence or action relating to those assets is required in connection with the process.
If satisfied, the Adjudicating Authority may issue a letter of request to a court or authority of that country competent to deal with it.
This is an Indian request outward. It is not recognition of a foreign proceeding, which the Model Law would provide.

Answer: He may apply to the Adjudicating Authority under section 235. It may issue a letter of request to the foreign court, but only if the country has a reciprocal arrangement under section 234.

Exam tips

Draw a clear line between the Model Law position and the existing Indian law (sections 234 and 235). Examiners reward that.
Use the sequence access, recognition, relief, cooperation as your answer structure.
In case questions, decide COMI first and write it as a separate conclusion.
Name the two relief categories, automatic and discretionary, and say which proceeding attracts which.
Cite sections 234 and 235 accurately, and only state what the text provides.

Practice questions from Cross Border Insolvency (Elective 7.5)

Recognition and Relief under the Model Law: frequently asked questions

How does a foreign representative get access to a court under the Model Law?

He applies directly to the court of the enacting State. No licence or diplomatic channel is needed. He may also start a local insolvency proceeding.

What is the difference between a foreign main and non-main proceeding?

A main proceeding is in the State of the debtor's centre of main interests. A non-main proceeding is in a State where the debtor has only an establishment. Main proceedings bring automatic relief, and non-main ones only discretionary relief.

Does India recognise foreign insolvency proceedings under the IBC?

The IBC has no such recognition regime. Its sections 234 and 235 deal with reciprocal arrangements and letters of request. The Model Law approach has been discussed as a proposed framework.

What does section 235 of the IBC do?

It lets the resolution professional, liquidator or bankruptcy trustee apply to the Adjudicating Authority when assets are in a reciprocating country. The Adjudicating Authority may then issue a letter of request to that country's court or authority.