23rd September, 2019

Insolvency and Bankruptcy Board of India
Mayur Bhawan, New Delhi – 110001.

Dear Sir,

The Working Group on Group Insolvency constituted, vide office order No. IBBI/CIRP/GI/2018-19/001 dated 17th January, 2019, have the privilege and honour to present its Report to the Insolvency and Bankruptcy Board of India.

2. The Working Group adopted a consultative approach and has been benefitted considerably from the interactions with various stakeholders. It has attempted to provide a comprehensive framework for Group Insolvency, to be implemented in a phased manner, with procedural co­ordination to start with in the first phase.

3. We thank the Insolvency and Bankruptcy Board of India for providing us an opportunity of developing a framework for Group Insolvency under the Insolvency and Bankruptcy Code, 2016. We believe that the framework recommended by the Working Group would take the insolvency reform a step forward.

Yours sincerely,

(U. K. Sinha)

(Anshula Kant) Member (Shardul Shroff) Member (Shubhashis Gangopadhyay) Member (Siby Antony) Member (Koushik Chatterjee) Member
(Sumit Binani) Member


(Sumant Batra) Invitee (S. K. Gupta) Invitee (Alka Kapoor) Invitee (Sunil Pant) Invitee


23rd September, 2019

With the enactment of the Insolvency and Bankruptcy Code, 2016 (Code), India put in place a robust market mechanism for timely and time bound resolution of corporate distress. It enables revival of companies in financial distress and facilitates closure of companies in economic distress. It, however, incentivises and empowers the stakeholders to resolve the distress when a company starts experiencing financial distress, much before it experiences economic distress. The provisions of the Code and the emerging jurisprudence reinforce revival of every company in distress and maximise its value.

A company is a legal person having its own distinct identity. Its rights and duties and powers and obligations are well defined. Depending on its assessment of risk-return associated with a company on standalone basis, a stakeholder takes a stance about the company and deals with it accordingly. Where the company gets into distress, the stakeholders attempt to resolve the distress of that company alone to maximise their interests. The Code provides a detailed framework to deal with the insolvency of a company in distress, on standalone basis.

However, there are situations where the fate of one company is linked to that of another. In such cases, the stakeholders may maximise their interests and the possibility of revival of companies may be higher, if such linked companies are resolved together. The Code, however, does not envisage a framework to either synchronise insolvency proceedings of different companies in a group or to resolve their insolvencies together.

There are difficulties of resolving distress of a group of companies together. It is conceptually difficult as the stakeholders usually deal with each company on a standalone basis. If the law requires resolution of a group of companies together, the stakeholders would conduct due diligence of a group of companies before dealing with them, which is extremely difficult, at least for stakeholders having small stakes. Further, the stakeholders may have conflicting interests in different companies in a group. For these reasons, not many jurisdictions have a comprehensive framework for resolving insolvency of a group of companies.

Given that resolution of a group of companies can be value-adding as compared to separate insolvency proceeding for each company in distress, many jurisdictions are contemplating to make available an enabling framework for the same. In this background, the Insolvency and Bankruptcy Board of India (IBBI) constituted a Working Group to recommend a complete framework to facilitate insolvency resolution and liquidation of companies in a group.

While keeping in mind the basic legal principles of separate legal personality, asset partitioning and limited liability on the basis of which modern commerce is organised, the Working Group carried out extensive consultations with various stakeholders, including insolvency professionals, professional bodies, industry chambers, law firms, banks, resolution applicants, academicians and domain experts, who provided insightful comments and suggestions. This report is a sincere attempt to present a blue-print of a ‘Group Insolvency Framework’ that balances competing considerations in the interests of value maximisation, credit growth and promotion of entrepreneurship.

The thrust of the framework is ‘facilitation’, ‘flexibility’ and ‘choice’. It envisages an enabling group insolvency framework, to be implemented in a phased manner. The first phase may facilitate procedural co-ordination of only companies in domestic groups. Cross-border group insolvency and substantive consolidation could be considered at a later stage, depending on the experience of implementing the earlier phases of the framework, and the felt need at the relevant time. While it would be voluntary for the stakeholders of the company in distress to use the framework, the provisions relating to communication, cooperation and information sharing between Insolvency Professionals, Committee of Creditors and Adjudicating Authorities is proposed to be made mandatory for the companies which belong to a group and have been admitted into corporate insolvency resolution process.

The Working Group takes this opportunity to thank the stakeholders who participated in the consultation process. It appreciates the valuable contribution of Ms. Shreya Prakash and Mr. Oitihjya Sen from the Vidhi Centre for Legal Policy for legal research and drafting support. It also appreciates the dedicated efforts put in by Mr. Methil Unnikrishnan and Mr. Yadwinder Singh of the IBBI for collating suggestions, facilitating consultations and providing administrative and technical support for the smooth functioning of the Working Group. I thank each member of the Working Group for enriching the deliberations of the Committee and bringing different perspectives on the table, which makes this report comprehensive and practical.

I hope that the recommendations of this Working Group will help the Government of India and the IBBI to devise a Group Insolvency Framework that is suited to the needs of a fast-moving and modern economy.

(U. K. Sinha)
Chairperson, Working Group on Group Insolvency

Download Full Report of of The Working Group on Group Insolvency

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