11 January 2022
Notification dated: 24 November 2021
Summary:
A situation concerning cross-border insolvency arises when the debtor has assets or creditors in different jurisdictions or when different insolvency proceedings have been filed in multiple jurisdictions. The Code, at present, does not have provisions for crossborder insolvency. In order to address the growing need of cross-border insolvency, the government constituted an insolvency law committee, which had proposed a framework for cross-border insolvency. The government has now amended the cross-border insolvency framework and has sought comments from the public.
The amendments to the cross-border insolvency framework are:
- Cross-border insolvency will now be applicable to corporate debtors as well as personal guarantors;
- The adjudicating authority for personal guarantors would be the Debt Recovery Tribunals (DRT), while for corporate debtors would be the NCLT. However, where insolvency proceeding of a corporate debtor is adjudicated before NCLT, then cross-border application for personal guarantors of such a corporate debtor should also be filed before the NCLT and not the DRT;
- Centre of main interest for personal guarantors would be their habitual place of residence; and
- Provisions of cross-border insolvency will not be applicable on pre-packaged insolvency resolution process and financial service providers.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
