Dr. T. K. Vishwanathan*

Globalisation of markets has necessitated unification of legal principles governing commercial transactions. Capital searches the Globe for best returns. With the advent of digital technology and interconnected computer networks it is easy to move money out of a nation’s financial system by a click of a button. In a modern society, substantial business transactions take place between businesses operating in multiple jurisdictions. In the event of an insolvency, businesses are often involved in coordinating cross-border insolvency proceedings through a number of jurisdictions in which that business may operate, or in which that business may have assets or be due accounts receivable from various third parties. To address this need, many sophisticated economies have well developed cross-border insolvency laws.

The Insolvency and Bankruptcy Bill, 2015 as recommended by the Bankruptcy Law Reforms Committee (BLRC) Report 1 did not contain provisions to address cross-border insolvency issues. But when the Bill was examined by the Joint Committee of Parliament, the Committee expressed the need to address the cross-border insolvency issues.

Since adequate institutional back up was not readily available to deal with cross-border insolvencies, the Insolvency and Bankruptcy Bill, 2015 did not address cross-border issues when it was introduced in the winter session of Lok Sabha in 2015. The requisite institutional backups were dedicated bankruptcy courts, well-organised resolution professionals, information utilities and seamless communication between bankruptcy courts of different jurisdictions. To address the lacunae the Joint Committee of Parliament which examined the Insolvency and Bankruptcy Bill, 2015 recommended two sections which were added as a stop gap measure and was enacted as the Insolvency and Bankruptcy Code, 2016 (Code) to deal with cross-border insolvency issues . 2 However both these provisions do not provide the adequate framework to deal with cross border insolvency issues effectively.

As early as in 2002, the Prof. Mitra Committee Report on Bankruptcy Laws,3 inter alia, identified some of the issues which may arise in cross-border insolvency and highlighted the need for a cross border insolvency law. However, the Report was not acted upon. Due to the inadequacy of the bilateral treaty approach to deal with cross-border insolvency, it is necessary to explore other mechanisms to address the problem.


A brief discussion about the theoretical basis for cross-border insolvency will help us to understand the issue in the proper perspective. According to Irit Mevorach, the theoretical basis for cross-border insolvency veers around three legal theories, namely Universalism, Territorialism and Modified Universalism. Universalism aims to provide a single forum applying a single legal regime to administer the debtor’s assets and liabilities on a worldwide basis. In contrast, territorialism is founded on the idea of state sovereignty, where each country employs its own insolvency laws to grab the assets and administer them locally according to the procedures and priorities of that country’s laws. In such a system, there is no recognition of foreign proceedings because it envisages that insolvency proceedings within a jurisdiction have effect only within that jurisdiction. 5 In other words, local assets are meant for local creditors, regardless of proceedings occurring elsewhere. Universalism implies that property owned by the foreign debtor in any part of the world back to the debtors home jurisdiction in order for the property can be distributed to the debtors’ creditors in conformity with the local jurisdiction’s distribution scheme. 6 Modified Universalism incorporates the philosophy of universalism but accepts that a country may only unilaterally control its own territory and laws and uses private international laws and rules and shapes them to fit global insolvency in line with Universalist theory to provide a global collective process. Under the Modified Universal regime, a country does not try to coordinate its legislation with another country but rather creates a system that is open to cooperation while seeking broadest impact for its own laws. It prescribes that courts should, as far as is consistent with justice, public policy and unique domestic considerations, actively assist and cooperate with the courts of the country of the principal liquidation. It combines the theories of universality and territoriality wherein one forum hosts a primary insolvency proceeding to which other jurisdictions supplement with ancillary or secondary proceedings.7


The United Nations Commission on International Trade Law (UNCITRAL) Model law on Cross-Border Insolvency [MLCBI/ Model Law] 8 adopts Modified Universalism and finds favour with most of the international community. It is the most widely accepted blue-print to effectively deal with cross-border insolvency issues, while ensuring the least intrusion into each country’s internal insolvency and bankruptcy laws. MLCBI contains uniform rules concerning large portions of modified universalism norms, specifically regarding recognition of main, as well as non-main, proceedings, a range of relief that should be provided to foreign proceedings, assistance to foreign courts and foreign representatives, and mechanisms to enhance cooperation and coordination between courts and insolvency representatives.

The Model Law allows the determination as to when a foreign insolvency proceeding should be accorded ‘recognition’ and what the consequences of such a recognition may be. It provides the person administering a foreign insolvency proceeding (‘foreign representative’) with access to the courts of the enacting country. In this way, it permits the foreign representative to seek a temporary breathing space, and allows the courts in the enacting country to determine what coordination among the jurisdictions or other relief is warranted for optimal disposition of the insolvency. It permits courts in the enacting country to cooperate more effectively with foreign courts and representatives involved in an insolvency matter; authorises courts in the enacting country and persons administering insolvency proceedings in the enacting country to seek assistance abroad; provides for court jurisdiction and establishing rules for coordination where an insolvency proceeding in the enacting country is taking place concurrently with an insolvency proceeding in a foreign country; and establishes rules for coordination of relief granted in the enacting country to assist two or more insolvency proceedings that may take place in foreign country regarding the same debtor.

The Model Law is supplemented by:

  • UNCITRAL Legislative Guide on Insolvency Law (Legislative Guide), which, together with the World Bank Principles on Creditor- Debtor Regimes (World Bank Principles), constitutes the international best-practice standard for insolvency regimes (the Insolvency Standard);
  • UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation (2009) (Practice Guide) which addresses two main subjects:
    • Possible forms of cooperation under Article 27 (Section II);
    • Cross-border insolvency agreements (Section III) – Containing agreements contemplated by Article 27(d) of the Model Law. The Practice Guide includes ‘sample clauses’, which are based to varying degrees upon provisions found in actual insolvency agreements. 10 The Practice Guide also provides information for insolvency practitioners and judges on practical aspects of cooperation and communication in cross-border insolvency cases. It illustrates how the resolution of issues and conflicts that might arise in those cases could be facilitated by cross-border cooperation, in particular through the use of cross-border insolvency agreements, tailored to meet the specific needs of each case and the requirements of applicable law.11
  • UNCITRAL Model Law on Cross-Border Insolvency: The Judicial Perspective, (2011)12 which contains a chapter entitled ‘Cooperation and Coordination’.13 It discusses the UNCITRAL Model Law on Cross-Border Insolvency from a judge’s perspective.

Recognising that some enacting States have amended the Model Law to suit local circumstances, different approaches might be required if a judge concludes that the omission or modification of a particular article from the text as enacted necessitates such a course. The purpose of this Perspective is to use the decided cases solely to illustrate particular strands of reasoning that might be adopted in addressing specific issues. In each case, the judge will determine the case at hand on the basis of domestic law, including the terms of legislation enacting the Model Law.

  • Recognition and enforcement of insolvency-related judgments: draft Model Law14 The purpose of this Model Law is:
    • to create greater certainty for parties in regard to their rights and remedies for [recognition and] enforcement of insolvency-related judgments;
    • to avoid the duplication of proceedings;
    • to ensure timely and cost-effective recognition and enforcement of insolvency-related judgments;
    • to promote comity and cooperation between jurisdictions regarding insolvency-related judgments;
    • to protect and maximise the value of insolvency estates; and
    • where legislation based on the Model Law on Cross-Border Insolvency has been enacted, to complement that legislation.

The four broad features of the Model Law are as follows:

    • Access to Adjudicating Authority (AA) for representatives of foreign insolvency proceedings and authorisation to resolution professional (RP) and Liquidator appointed under the Code to seek assistance elsewhere;
    • Recognition of certain orders issued by foreign courts;
    • Relief to assist foreign proceedings; and
    • Cooperation among the courts of countries where the debtor’s assets are located and coordination of concurrent proceedings.


There are two main challenges which must be addressed while dealing with cross-border insolvencies. The first relates to judicial cooperation between bankruptcy courts of different jurisdictions and the second relates to the concept of Centre of Main Interests (COMI).

Articles 25 and 27 provide for cooperation between courts (and between courts and foreign representatives) in the cross-border insolvency matters that are referred to in Article 1 of the Model Law. 15 The Model Law does not specify any mode of communication. However, the UNCITRAL Guide to Enactment of the Model Law (UNCITRAL Guide to Enactment)16 notes that the ability of courts, with the appropriate involvement of the parties, to communicate ‘directly’ and to request information and assistance ‘directly’ from foreign courts is intended to avoid the use of time-consuming procedures traditionally in use, such as letters rogatory.

Article 25 is ‘designed to overcome the widespread problem of national laws lacking rules providing a legal basis for cooperation by local courts with foreign courts in dealing with cross-border insolvencies.’ 17 The UNCITRAL Guide to Enactment contemplates that ‘enactment of such a legal basis would be particularly helpful in legal systems in which the discretion given to judges to operate outside areas of express statutory authorisation is limited. However, even in jurisdictions in which there is a tradition of wider judicial latitude, enactment of a legislative framework for cooperation has proved to be useful.’18

Article 27 identifies relevant forms of cooperation.19 It was included in the Model Law in recognition that the idea of cooperation: ‘might be unfamiliar to many judges and insolvency 20 representatives. ‘ The Guide states that the list is indicative ‘to avoid inadvertently precluding certain forms of appropriate cooperation and limiting the ability of courts to fashion remedies in keeping with specific circumstances.’

The UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation (2009) (UNCITRAL Practice Guide) identifies certain potential benefits of establishing communication in cross-border insolvency proceedings 22 and states that:

‘[j]udicial cooperation is increasingly viewed as essential to the efficient and effective conduct of cross-border insolvency cases, increasing the predictability of the process, because debtors and creditors do not have to anticipate judicial reactions to foreign proceedings, and enhancing the equitable treatment of all parties.’23


To supplement the requirements of the aforementioned Articles, the Judicial Insolvency Network (JIN) issued the Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters (JIN Guidelines) also known as the JIN Guidelines, in its inaugural Conference in 2016. The JIN Guidelines have been adopted by England and Wales on May 04, 2017. An interesting part of the Guidelines is Annex A which relate to Guidelines on the Conduct of Joint Hearings by courts of different jurisdictions. The JIN serves as a platform for sustained and continuous engagement, for the furtherance of the following three objectives:

  • judicial thought leadership in cross-border insolvency and restructuring;
  • to develop best practices in cross-border insolvency and restructuring; and
  • to facilitate communication and cooperation amongst national courts in cross-border insolvency and restructuring matters.

The overarching aim of the JIN Guidelines is the preservation of enterprise value and the reduction of legal costs. It adds to the other sources of guidance about judicial cooperation by providing a framework for parties to cross-border insolvency proceedings to customise protocols that will facilitate court-to-court communication and cooperation in the relevant case.

The JIN Guidelines sets out the following six matters which the Guidelines aim to promote:

  • efficient and timely coordination and administration of parallel proceedings;24
  • the administration of parallel proceedings with a view to ensuring relevant stakeholders’ interests are respected;
  • identification, preservation, and maximisation of the value of the debtor’s assets, including the debtor’s business;
  • management of the debtor’s estate in ways that are proportionate to the amount of money involved, the nature of the case, the complexity of the issues, the number of creditors and the number of jurisdictions involved in parallel proceedings;
  • sharing of information in order to reduce costs; and
  • avoidance or minimisation of litigation, costs, and inconvenience to the parties in parallel proceedings.


The JIN Guidelines include the following principles for application in connection with a joint hearing of courts in different jurisdictions, noting that by the implementation of the principles, ‘neither a court nor any party shall be deemed to have approved or engaged in any infringement on the sovereignty of the other jurisdiction’:

  • Each court shall have sole and exclusive jurisdiction and power over the conduct of its own proceedings and the hearing and determination of matters arising in its proceedings;
  • Each court should be able to simultaneously hear the proceedings in the other court(s). Consideration should be given as to how to provide the best audio-visual access possible;
  • Consideration should be given to coordination of the process and format for submissions and evidence filed or to be filed in each court;
  • A court may make an order permitting foreign counsel or any party in another jurisdiction to appear and be heard by it. If such an order is made, consideration needs to be given as to whether foreign counsel or any party would be submitting to the jurisdiction of the relevant court and/or its professional regulations;
  • A court should be entitled to communicate with the other court in advance of a joint hearing, with or without counsel being present, to establish the procedures for the orderly making of submissions and rendering of decisions by the courts, and to coordinate and resolve any procedural, administrative or preliminary matters relating to the joint hearing; and
  • A court, subsequent to the joint hearing, should be entitled to communicate with the other court, with or without counsel present, for the purpose of determining outstanding issues. Consideration should be given as to whether the issues include procedural and/or substantive matters. Consideration should also be given as to whether some or all of such communications should be recorded and preserved.


The EU JudgeCo Platform provides another forum for valuable sources on cross-border insolvency court-to-court cooperation and communication in the context of the European Union (EU).25 The EU Cross-Border Insolvency Court-to-Court Cooperation Principles26 cover 26 Court-to-Court Cooperation Principles (EU JudgeCo Principles) and 18 EU Cross-Border Insolvency Court-to-Court Communications Guidelines (EU JudgeCo Guidelines).

These 26 non-binding EU JudgeCo Principles encompass subjects such as the objectives of cooperation in cross-border insolvency cases, case management by a court, the equal treatment of creditors, the approach to a stay or moratorium, cooperation in achieving a cross-border sale or an international reorganisation plan, and principles about judicial decisions itself, such as the giving and publication of reasons.27 Several principles relate to aspects of the conduct of the proceedings, such as language, the provision of notice to creditors and insolvency practitioners, and the authentication of documents.

According to the EU JudgeCo Guidelines28 commentary, a joint hearing requires that either court can also question a person who has appeared before the other court or allow one or more persons to speak and includes the following ‘safeguards’ for direct ‘judge-to-judge’ cross-border communication in international insolvency cases:

  • direct ‘judge-to-judge’ cross-border communication should occur only where such communication is necessary;
  • direct ‘judge-to-judge’ cross-border communication should relate to matters which do not concern the substantive merits of the case; and
  • direct judicial cross-border communication can only take place where there are sufficient procedural safeguards in place to ensure that parties have an opportunity to be heard on the application to communicate and (if appropriate) to attend (or be represented at) the occasion on which the communication takes place.


The second area where we can encounter some initial difficulties in dealing with cross border insolvencies relates to the concept of COMI. The concept of a debtor’s COMI is fundamental to the operation of the Model Law. In practice, simultaneous application of the divergent and conflicting COMI tests opens the door to forum shopping, jurisdictional conflicts and even situations in which the COMI of the same company is found in different states at the same time. The Model Law accords proceedings commenced in that location greater deference and, more immediate and automatic relief.

The essential attributes of the debtor’s COMI correspond to those attributes that will enable those who deal with the debtor (especially creditors) to ascertain the place where an insolvency proceeding concerning the debtor is likely to commence.

The corporate debtor’s (CD) COMI maybe identified by the ordinary place of its business. To determine that the following factors maybe relevant namely:

  • location of the CD’s books and records;
  • location where financing was organised or authorised, or from where the cash management system was run;
  • location in which the CD’s principal assets or operations are found;
  • location of the CD’s primary bank;
  • location of employees;
  • location in which commercial policy was determined;
  • site of the controlling law or the law governing the main contracts of the company;
  • location from which purchasing and sales policy, staff, accounts payable and computer systems were managed;
  • location from which contracts (for supply) were organised;
  • location from which reorganisation of the CD was being conducted;
  • jurisdiction whose law would apply to most disputes;
  • location in which the debtor was subject to supervision or regulation; and
  • location whose law governed the preparation and audit of accounts and in which they were prepared and audited. For an individual, their habitual place of residence shall be the centre of main interest.

Due to the vague nature of the COMI concept and the absence of its definition, determining the place of the COMI has thus been quite problematic. A brief outline of a few cases involving COMI from the US and the EU will shed light on the complex issues which come into play when courts are confronted with cross-border insolvency cases.

The Model Law was incorporated into UK legislation through the Cross-Border Insolvency Regulations in 2006 (CBIR), in the US in the form of Chapter 15 of the Federal Bankruptcy Code in 2005 and in the EU as the European Insolvency Regulation (EIR). EIR Recast (Article 3) and Chapter 15 (11 USC § 1516(c)) presume that the debtor’s registered office coincides with its COMI. However, European courts have set a rather high bar for the rebuttal of the presumption and require the applicant to provide sufficient evidence that COMI is somewhere else whereas the US courts treat the presumption as merely indicative for ‘speed and convenience.30

The EU Regulation 1346/2000, Article 3 (1) states that the place which has the debtor’s COMI gives jurisdiction to the court of the concerned Member State to initiate main insolvency proceedings. Furthermore, if there is no proof of contradiction, COMI is presumed to be the place where the company has its registered office. Although the regulation does not define COMI, it is stated in Recital 13 of the regulation that the location/setting where a debtor carries out administration in pursuance of its interests on a consistent basis and ‘ascertainable by third parties’should be the COMI of the debtor.

The European Court of Justice in Interedil Srl case31 on a reference32 for a preliminary ruling concerning the interpretation of Article 3 of Council Regulation (EC) No. 1346/2000 of May 29, 2000 on insolvency proceedings, by a judgment dated October 20, 2011, defined the term ‘COMI’. The Court ruled that the term ‘Centre of a debtor’s main interests’ in Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted by reference to EU law. That concept is peculiar to the Regulation and must therefore be interpreted in a uniform way, independently of national legislation.33

According to the Court:

For the purposes of determining a debtor company’s main centre of interests, the second sentence of Article 3(1) of Regulation No 1346/2000 on insolvency proceedings must be interpreted as meaning that a debtor company’s main centre of interests must be determined by attaching greater importance to the place of the company’s central administration, as it may be established by objective factors ascertainable by third parties. If the bodies responsible for the management and supervision of a company are to be found in the same place as its registered office and the management decisions of the company are taken, in a manner ascertainable by third parties, in that place, the presumption in that provision cannot be rebutted. If a company’s central administration is not to be found in the same place as its registered office, the presence of company assets and the existence of contracts for the financial exploitation of those assets in a Member State other than that in which the registered office is situated cannot be regarded as sufficient factors to rebut the presumption unless a comprehensive assessment of all the relevant factors makes it possible to establish, in a manner ascertainable by third parties, that the company’s actual centre of management and supervision and of the management of its interests is located in that other Member State.

When a debtor company’s registered office is transferred before a request to open insolvency proceedings is lodged, the company’s centre of main activities is presumed to be the place of its new registered office.34

Finally, the Court added that the term ‘establishment’ within the meaning of Article 3(2) of Regulation No. 1346/2000 must be interpreted as requiring the presence of a structure consisting of a minimum level of organisation and a degree of stability necessary for the purpose of pursuing an economic activity. The presence alone of goods in isolation or bank accounts does not, in principle, meet that definition.

One of the questions that arose in relation to the CBIR and the Model Law is whether the key concepts of COMI and establishment have the same meanings in the Model Law as they have in the EIR that was entered into force in 2016. In particular, some of the US case law on Chapter 15 of the US Bankruptcy Code seemed to develop a concept of COMI rather different from that put forward in the Eurofood case.

In the Eurofood case 35 the Irish High Court decided that, according to Irish law, the insolvency proceedings in respect of Eurofood had been opened in Ireland on the date on which the application was submitted by the Bank of America NA, namely January 27, 2004. Taking the view that the COMI of Eurofood was in Ireland, it held that the proceedings opened in Ireland were the main proceedings. It also held that the circumstances in which the proceedings were conducted before the District Court, Parma, Italy were such as to justify the refusal of the Irish courts to recognise the decision of that court. Finding that Eurofood was insolvent, the High Court made an order for winding up and appointed Mr Farrell as the liquidator. On appeal against that judgment, the Supreme Court considered it necessary, before ruling on the dispute before it, to refer various questions concerning the interpretation of the Regulation to the European Court of Justice (ECJ). The ECJ was asked to determine whether the Irish or the Italian court had jurisdiction to commence `main’ insolvency proceedings in respect of Eurofood IFSC Limited. The ECJ first considered what was the determining factor for identifying the COMI of a subsidiary company, where it and its parent have their respective registered offices in two different Member States. The ECJ confirmed that the principle of `mutual trust’ requires member states to recognise a decision opening main proceedings without being able to review the assessment made by the first court as to its jurisdiction (Article 16 and Recital 22, the Regulation). If an interested party with a different view on the debtor’s CoMI wishes to challenge that decision, he may only do so using the remedies prescribed by the national law of the member state in which the main proceedings were opened. Finally, the ECJ ruled in favour of the Irish court..

In re Ocean Rig Udw Inc. the debtors earlier maintained their COMI, in the Republic of the Marshall Islands (RMI), which did not have a statute or any procedures permitting reorganisation. The debtors therefore sought to move their COMI to Cayman Islands, which had statutory law and procedures permitting restructuring. The bankruptcy court found that none of the debtors have ever maintained administrative, management, or executive offices in the Marshall Islands RMI, have ever had any directors who were residents or citizens of the Marshall Islands RMI, or have ever held a meeting of its directors or shareholders in the Marshall Islands RMI. In contrast, the bankruptcy court determined that, in light of the fact that several directors of the debtors had residences in the Cayman Islands, the debtors held regular board meetings in the Cayman Islands, several significant officers of UDW resided and worked in the Cayman Islands, office and administrative, services for the debtors were performed from the Cayman Islands, the share certificates of UDW’s subsidiaries securing the various debt obligations were held in the Cayman Islands, the debtors all had bank accounts used for the debtors’ business in the Cayman Islands, and the debtors’ books and records were held in the Cayman Islands, that the debtors’ COMI was the Cayman Islands.37


The Code is a jewel in the Indian statute book and is a historic law reform legislation undertaken by the Government of India. Apart from reforming the credit market, the Code also represents a new direction of law reform which is likely to take shape in the coming years. The Central Government followed up the enactment of the Code with a continuous monitoring mechanism by constituting a Standing Committee on the Code 38 to respond to the challenges arising in the operation of the Code. This has given a great force to the Code by energising it to realise its stated objectives. So far Law reform in India revolves around doctrinal research and depends upon the accidents of litigation. Law in action studies and impact analysis are absent. There was no systematic and continuous law reform based on empirical and socio-legal research reflecting what Ehrlich calls as the living law39 of the people. The Code is likely to change this trend and usher a new wave of law reform which will extensively use data and market indicators to keep the law in tune with current economic and social realities.

We have brilliant judges adorning the courts and tribunals who are charged with the duty of laying the foundation of new legislations enacted by Parliament. The appointments of Justice Sikri as international Judge of the Singapore International Court by the President of Republic of Singapore and Justice Madan B. Lokur as a Judge of the non-resident panel of the Supreme Court of Fiji sends a strong signal to the Global legal fraternity that our Judges are second to none and are of world class material. Since no legislation can be comprehensive so as to cover all possible situations which may arise in future judges of our Tribunals have deal with new situations and decide cases. As stated by Justice Cardozo when a Judge is faced with a difficult case where legislation or precedent does not guide him he has to rely upon reading of life itself. Justice Holmes’ prophecy more than hundred years ago that for the rational study of the law the black-letter man maybe the man of the present, but the man of the future is the man of statistics and the master of economics, is going to be tested through the provisions of Code since the decision as to the revival of a firm will be a decision based on sound economic principles in tune with market realities and not on the dry bones of the black letter law. Accordingly, the Code reposes great faith in the wisdom of the market players in the credit market by empowering the financial creditors to take the final decision on the prospects of revival of a business enterprise.

With introduction of Cross-Border provisions our Tribunal Members will have more opportunities to interact with bankruptcy judges from other jurisdictions. With technology facilitating virtual court proceedings and tele-immersion hearings where judges sitting in different hemispheres in different time zones can seamlessly collaborate and lay down the foundation for a robust global insolvency Jurisprudence.

In the US, the American Bankruptcy Institute ‘ (ABI) :

  • plays a leading role in providing congressional leaders and the general public with non-partisan reporting and analysis of bankruptcy regulations, laws and trends and is often called on to testify before Congress, analyse proposed Bills, and conduct periodic briefings for congressional committees and legislative staff;
  • provides professional service to its members with high-quality conferences, comprehensive continuing education, effective legal research, and dynamic networking opportunities;
  • is engaged in numerous educational and research activities, as well as the production of a number of publications both for the insolvency practitioner and the dedicated to research and education on matters related to insolvency.

We need to emulate the ABI example and set up an institution like ABI where our bankruptcy judges and resolution professionals and other stakeholders can collaborate and contribute towards the development of insolvency jurisprudence.

> 3 We failed to capitalise the fruits of industrial revolution for historical reasons, but digital revolution is triggered by our youth. It is our revolution. If knowledge is capital, then we are all knowledge capitalists. We can leverage the benefits of knowledge revolution to our advantage and become a global power. If resolution professionals, lawyers, bankers and other participants in the resolution process evince interest in this fast emerging field and familiarise themselves quickly with the basics of reviving and restructuring firms, then sky will be the limit for striking gold in the new expertise and will accelerate India’s efforts to emerge as a Major Restructuring Hub of Asia.


1 Report of the BLRC: Volume 1- Design and Rationale. Insolvency and Bankruptcy Board of India.

2 Section 234 to provide for agreements with foreign countries and section 235 to provide for letter of request to a country outside India in certain cases. Para 62, Report of the Joint Committee on the Insolvency and Bankruptcy Code.

3 The Report of the Advisory Group on Bankruptcy Laws. Reserve Bank of India. February 2002.

4Mevorach, Irit. The Future of Cross-Border Insolvency (p. x). OUP Oxford. Kindle Edition.

5Justice A. K. Sikri (2009). Cross Border Insolvency: Court to Court Cooperation, Journal of the Indian Law Institute Vol. 51, No. 1, pp. 468-69.

6Mevorach, Irit. supra note 4;

7Mevorach, Irit. supra note 4;

8The Model Law was adopted in 1997 by the General Assembly by Resolution 52/158 of December 15,1997. Prior to this, the UNCITRAL adopted the Model Law by consensus on May 30,1997.

9Date of adoption: July 01, 2009;

10Annexe 1 to the UNCITRAL Practice Guide includes summaries of the cases in which the cross-border insolvency agreements that form the basis of the Practice Guide were concluded.

11 Chapter I of the Practice Guide discusses the increasing importance of coordination and cooperation in cross-border insolvency cases and introduces various international texts relating to cross-border insolvency that have been developed in recent years. Chapter II expands upon article 27 of the UNCITRAL Model Law, discussing the various ways in which cooperation in cross-border cases might be achieved. Chapter III examines in detail the use of cross-border insolvency agreements, a number of which have been entered into in cross-border insolvency cases over the past two decades, ranging from written agreements approved by courts to oral arrangements between parties to the proceedings. The analysis in this chapter is based on practical experience, in particular, in the cases summarised in annex I. “Sample clauses”, based to varying degrees upon provisions found in these agreements, are included to illustrate how different issues have been or might be addressed in practice.

12The UNCITRAL Model Law on Cross-Border Insolvency: The Judicial Perspective was finalised and adopted by the UNCITRAL on July 01, 2011.

13 UNCITRAL Model Law on Cross-Border Insolvency: The Judicial Perspective (2012) United Nations Commission on International Trade Law. https://www.uncitral.org/pdf/english/texts/insolven/V1188129-Judicial_Perspective_ebook-E.pdf.

14 Official Records of the General Assembly, 69th Session, Supplement No. 17 (A/69/17), para. 155. A/CN.9/WG.V/WP.150 4/4 V.17-06658.

15 Cooperation with Foreign Courts and Foreign Representatives- Chapter IV of the Model Law
16UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment
http://www.uncitral.org/uncitral/en/uncitralDtexts/insolvency/1997Model.html, [218].

17 UNCITRAL Guide to Enactment, [213].

19 It outlines the Forms of Cooperation as follows –

Cooperation referred to in articles 25 and 26 maybe implemented by any appropriate means, including:

(a) Appointment of a person or body to act at the direction of the court;

(b) Communication of information by any means considered appropriate by the court;

(c) Coordination of the administration and supervision of the debtor’s assets and affairs;

(d) Approval or implementation by courts of agreements concerning the coordination of proceedings;

(e) Coordination of concurrent proceedings regarding the same debtor;

(f) [The enacting State may wish to list additional forms or examples of cooperation].

20 Id. at 41

21Id. at 220.

22The Practice Guide identifies the following potential benefits of establishing communication in cross-border proceedings:

(a) assisting parties in better understanding the implications or application of foreign law, particularly the differences or overlaps that may otherwise lead to litigation ;

(b) facilitating resolution of issues through a negotiated result acceptable to all;

(c) eliciting more reliable responses from parties, avoiding inherent bias and adversarial distortion that may be apparent where parties represent their own particular concerns in their own jurisdictions;

(d) serving international interests by facilitating better understanding that will assist in encouraging international business and preserving value that would otherwise be lost through fragmented judicial action; and

(e) the possible revelation of some fact or procedure that will substantially inform the best resolution of the case and may, in the longer term, serve as an impetus to law reform

23UNCITRAL Practice Guide, [56] http://www.uncitral.org/pdf/english/texts/insolven/Practice_Guide_english.pdf>.

24Parallel Proceedings’ is defined in the JIN Guidelines to mean: cross-border proceedings relating to insolvency or adjustment of debt opened in more than one jurisdiction.

25EU JudgeCo Platform. Leiden University.  https://www.universiteitleiden.nl/en/research/research-projects/law/eu-judgeco- platform.  26EU Cross-Border Insolvency Court-to-Court Communications Guidelines; http://www.ejtn.eu/PageFiles/16467/EUDCross-BorderDInsolvencyDCourt-to-CourtDCooperationDPrinciples.pdf

27 Wessels, B. EU Courts Can Rely on Soft Law Principles for Cooperation in Cross-border Insolvency Cases. https://www.law.ox.ac.uk/business-law-blog/blog/2016/04/eu-courts-can-rely-soft-law-principles-cooperation-cross-border. Wessels, B. Cross-border Insolvency Court-to-Court Cooperation Principles gain wide support. https://leidenlawblog.nl/articles/cross-border-insolvency-court-to-court-cooperation-principles-gain-wide-sup.

28Guideline No. 10

29The stated purpose of Chapter 15 is to “incorporate the Model Law on Cross-Border Insolvency so as to provide effective mechanisms for dealing with cases of cross-border insolvency.” 11 U.S.C. § 1501(a). Section 1501(a) provides that Chapter 15 is intended to serve the following objectives:

(i) cooperation between courts of the United States, United States trustees, trustees, examiners, debtors, and debtors in possession; and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases;

(ii) greater legal certainty for trade and investment;

(iii) fair and efficient administration of cross-border insolvencies that protects the interests of all creditors, and other interested entities, including the debtor; protection and maximization of the value of the debtor’s assets; and

(iv) facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

30 Wessels, B. COMI under European and American Insolvency Law.  https://www.law.ox.ac.uk/business-law-blog/blog/2019/02/comi-under-european-and-american-insolvency-law..

31Case C-396/09, Interedil Srl, in liquidation v. Fallimento Interedil Srl and Intesa Gestione Crediti SpA. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX463A62009CT0396. (Reference for a preliminary ruling from the Tribunale di Bari.)

32The reference was made in proceedings between Interedil Srl, in liquidation, on the one hand and Fallimento Interedil Srl and Intesa Gestione CreditiSpA, of which Italfondario SpA is the successor, on the other, concerning a petition for bankruptcy filed by Intesa against Interedil. Interedil challenged the jurisdiction of the Italian court on the ground that, as a result of the transfer of its registered office to the United Kingdom, only the courts of that Member State had jurisdiction to open insolvency proceedings.

33 Ibid ; See paras 43-44, operative part 2

34Ibid; See para. 59, operative part 3 .

35Eurofood was registered in 1997 with its registered office in Dublin. It is a wholly owned subsidiary of Parmalat SpA, a company incorporated in Italy. On December 24, 2003, Parmalat SpA was admitted to extraordinary administration proceedings by the Italian Ministry of Production Activities, who appointed Mr Bondi as the extraordinary administrator. On January 27, 2004, the Bank of America NA applied to the High Court (Ireland) for compulsory winding up proceedings to be commenced against Eurofood and for the nomination of a provisional liquidator. On the same day the High Court appointed Mr Farrell as the provisional liquidator. On February 09, 2004, the Italian Minister for Production Activities admitted Eurofood to the extraordinary administration procedure and appointed Mr Bondi as the extraordinary administrator. On 10 February 2004, an application was lodged before the District Court, Parma, for a declaration that Eurofood was insolvent. The hearing was fixed for February 17, 2004, Mr Farrell being informed of that date on February 13, 2004. On February 20, 2004, the District Court in Parma, taking the view that Eurofood’s COMI was in Italy, held that it had international jurisdiction to determine whether Eurofood was in a state of insolvency.

36585 B.R. 31, 36-37 (S.D.N.Y. 2018).

37The bankruptcy court further determined that the debtors had not manipulated their COMI in bad faith and that the requirements of sections 109(a) and 1517(a) of the Bankruptcy Code, necessary for a bankruptcy court to confirm a foreign proceeding under Chapter 15, were met. In view of the above the Court held the Cayman Proceedings as ‘foreign main proceedings’ within the meaning of section 1502(4) of the Bankruptcy Code because each Debtor’s COMI is the Cayman Islands and that scheme of adjustment proceedings pending in the Cayman Islands should be recognized as ‘foreign main proceedings’ under chapter 15 of the Bankruptcy Code, even though the debtors’ COMI had been shifted to the Caymans less than a year before the proceedings were commenced, because the country in which the debtors’ COMI had previously been located did not have a law permitting corporate restructurings.

38 Reconstitution of the Insolvency Law Committee as Standing Committee for review of the Insolvency and Bankruptcy Code, 2016; Order No. 30/3/2019, Insolvency Section, Ministry of Corporate Affairs, dated March 06, 2019;

39 The central point in Ehrlich’s theory is that ‘the law of a community is to be found in social facts and not in formal sources of law’. He says: ‘At present as well as at any other time the centre of gravity of legal development lies not in legislation nor in juristic science, nor in judicial decision, but in society itself.’ The living law is the law which dominates life itself even though it has not been posited in legal propositions. The source of our knowledge of this law is, first, the modern legal document; secondly, direct observation of life, of commerce, of customs and usages and of all associations, not only those that the law has recognised but also of those that it has overlooked and passed by, indeed even of those that it has disapproved. See Ziegert, Kurt A. (2001). Fundamental Principles of Sociology of Law. Walter L. Moll trans., Transaction Publishers. p. 19 (Originally published in 1936).

4° ‘It is when the colors do not match, when the references in the index fail, when there is no decisive precedent, that the serious business of the judge begins‘ – Cardozo B. (1921). The Nature of the Judicial Process; Yale University Press p. 21; https://archive.org/details/natureofthejudic008454mbp/page/n23;

41 ‘For the rational study of law, the black letter man may be the man of the present, but the man of the future is the man of statistics and the master of economics.’ Jr. Holmes O.W. (1897). The Path of the Law. Harvard Law Review 10, 457 ; https://www.constitution.org/lrev/owh/pathDlaw.htm

42 American Bankruptcy Institute (ABI)- ABI is the nation’s largest association of bankruptcy professionals, made up of over 12,000 members in multi-disciplinary roles, including attorneys, auctioneers, bankers, judges, lenders, professors, turnaround specialists, accountants and others. https://www.abi.org/about-us;

43I had the opportunity of addressing the U.S bankruptcy Judges who had gathered at the ABI Head Quarters in July 2016 for Annual Dinner during my visit to Washington after the enactment of the Code. There was so much enthusiasm among the Judges who had assembled there to interact with our bankruptcy Tribunal Members and share their experiences and also to learn from our perspective. They evinced keep to visit our country and learn first-hand from our stakeholders how our tribunals deal with the challenges they face. Our insolvency professionals and judges should interact with the ABI to learn from their experience.

Source- https://ibbi.gov.in/uploads/whatsnew/2456194a119394217a926e595b537437.pdf

*(Dr. T. K. Vishwanathan is Director, Pranab Mukherjee Foundation; Chairman, Bankruptcy Law Reforms Committee; formerly Union Law Secretary; Secretary General, Lok Sabha and Consultant to the President of India.)

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December 2020