Does the introduction of Section 240C mark India’s genuine entry into the mainstream of global insolvency jurisprudence, or does its effectiveness remain contingent on what courts and institutions choose to build around it?
The Insolvency and Bankruptcy Code, 2016, brought a structural change to India’s credit enforcement landscape. It displaced a fragmented regime with a creditor-driven resolution framework anchored in speed, predictability and value maximisation. In the decade that followed, the Code developed through jurisprudential evolution across Sections 7, 9 and 31. One question, however, has remained unresolved throughout: what framework governs insolvencies that extend beyond India’s territorial boundaries? The Insolvency and Bankruptcy Code (Amendment) Bill, 2026, through the enabling provisions introduced under Section 240C, provides the first legislative response to that question.
The gap has been visible since the Code’s inception. Sections 234 and 235 contemplated bilateral agreements and judicial letters of request as mechanisms for cross-border cooperation. Both provisions remained largely inoperative for nearly a decade. No substantive bilateral arrangement was concluded with any major creditor jurisdiction. In the absence of a statutory framework, Indian courts relied on principles of judicial comity and equitable coordination doctrines that offer guidance but cannot substitute for enforceable legal prerogative. For creditors with exposure to Indian corporates operating across jurisdictions, this uncertainty has carried a measurable cost, reflected in risk assessments, credit pricing and the terms on which international capital has been extended.
The 2026 amendment, by positioning Section 240C as the legislative foundation for a cross-border recognition regime, reflects India’s movement toward the principle of modified universalism coordinated insolvency administration across jurisdictions while preserving each system’s domestic procedural autonomy. Whether that movement translates into effective practice will depend on what follows the legislation.
The UNCITRAL Model Law: Procedural Bridges, Not Substantive Uniformity
India’s proposed framework draws on the UNCITRAL Model Law on Cross-Border Insolvency, 1997, adopted across more than sixty jurisdictions and widely regarded as the most workable procedural architecture for multinational insolvency coordination. The Model Law does not seek to harmonise the substantive insolvency laws of different states an endeavour that would be impractical across jurisdictions with materially different legal traditions. Its focus is procedural: recognition of foreign proceedings, access for foreign representatives to domestic courts, and mechanisms for inter-jurisdictional cooperation and coordination.
The Insolvency Law Committee, in its October 2018 Report, had recommended adoption of the Model Law with a reciprocity condition that India extend recognition in proportion to the recognition extended to Indian proceedings abroad. The framework under Section 240C reflects this approach, organised around four pillars: access of foreign representatives to domestic forums, recognition of foreign proceedings, court-to-court cooperation, and coordination of parallel proceedings. The delegated legislative route preserves parliamentary authority while allowing implementation to be regulated over time.
The Centre of Main Interests, or COMI, is the jurisdictional standard at the heart of this system. It determines whether a foreign proceeding qualifies as a ‘foreign main proceeding,’ attracting automatic relief, including moratorium protection. The registered office presumption is rebuttable on objective and ascertainable criteria, the actual location of management, the situation of principal assets, and creditors’ reasonable expectations at the time of extending credit. How Indian courts interpret and apply that standard will be one of the more consequential questions the new framework generates.
Jet Airways and Videocon: Judicial Pragmatism in a Legislative Vacuum
Before the 2026 amendment, Indian tribunals had already encountered cross-border insolvency in practice. The NCLAT’s decision in Jet Airways (India) Ltd. v. State Bank of India permitted a cross-border insolvency protocol between the Indian resolution professional and the Dutch bankruptcy administrator, recognising parallel proceedings and establishing coordinated asset administration mechanisms. It was India’s first judicially recognised multinational insolvency coordination framework, reached in the absence of any statutory basis for doing so.
The Videocon Industries Ltd. v. State Bank of India & Ors. Insolvency presented a related challenge. The NCLT Mumbai’s approach to procedural consolidation across the group’s entities reflected the practical difficulty of resolving integrated economic units through separate, uncoordinated proceedings. Both decisions demonstrated the adaptability of Indian insolvency jurisprudence. They also illustrated the limits of relying on judicial discretion as a substitute for legislative clarity. A foreign administrator considering whether to cooperate with Indian proceedings requires a predictable legal framework, not the prospect of a discretionary outcome. Section 240C addresses that need directly.
The Comparative Experience: Recognition as the Common Thread
The experience of established restructuring jurisdictions provides useful reference points. In the United States, Chapter 15 of the Bankruptcy Code formally incorporates the UNCITRAL Model Law and establishes cooperation with foreign courts as a statutory objective under 11 U.S.C. §1501. Recognition procedures under Sections 1515–1517 define the evidentiary threshold for foreign representatives, while Sections 1520 and 1521 provide for automatic and discretionary relief including moratorium protection and asset preservation. The Second Circuit’s decision in In re Fairfield Sentry Ltd. established that COMI must rest on factors objectively ascertainable to creditors, a principle that has anchored US cross-border recognition jurisprudence since.
The United Kingdom adopted the Model Law through the Cross-Border Insolvency Regulations 2006. The continuing tension with the rule in Antony Gibbs & Sons v. La Société Industrielle et Commerciale des Métaux, under which foreign proceedings cannot discharge English law governed debt without creditor consent, illustrates that recognition frameworks do not resolve every interaction between insolvency law and governing law doctrine. Indian courts are likely to encounter an analogous question when recognition of foreign proceedings is sought in respect of Indian law-governed instruments.
Within the European Union, Regulation (EU) 2018/848 goes further, mandating automatic mutual recognition of insolvency judgments across Member States. Articles 3, 19 and 20 together establish jurisdictional clarity and enforceability as legal defaults. The European Court of Justice in Eurofood IFSC Ltd. confirmed that COMI indicators must be objective and ascertainable to third parties, with creditor foreseeability as the governing principle. That emphasis on foreseeability is one that Indian courts would do well to carry into their own COMI jurisprudence from the outset.
The Credit Market Dimension
The significance of this reform extends beyond the insolvency procedure. Indian corporates access international capital through external commercial borrowings, foreign currency convertible bonds and offshore holding structures. International creditors in those transactions assess their exposure with reference to what a distress scenario would look like. Where the answer is uncertain because Indian proceedings may not be recognised abroad, or foreign proceedings may not effectively reach Indian assets, that uncertainty carries an economic cost. World Bank, report on Principles for Effective Insolvency and Creditor Rights Systems have consistently identified effective insolvency frameworks as foundational to credit market infrastructure, improving credit availability, reducing borrowing costs and strengthening investor confidence.
Read alongside the broader 2026 amendments the creditor-initiated insolvency resolution process, the group insolvency framework, and the structural refinements to CIRP and liquidation, the cross-border provisions form part of a coherent policy direction. Each element addresses a different dimension of the same underlying objective: an insolvency framework adequate to the realities of globally integrated Indian businesses.
Implementation: Where the Questions Begin
Legislation establishes a framework. Its effectiveness depends on how that framework is interpreted and applied. Several questions are already foreseeable. COMI determination will generate disputes in cases involving multinational corporate structures where the registered office is situated, the place of management and the location of principal assets are all different. The designated NCLT benches will need the analytical depth and comparative awareness to resolve such disputes consistently.
The public policy exception under the UNCITRAL Model Law on recognition and enforcement of insolvency-related judgments 2018, permitting refusal of recognition where a foreign proceeding would be manifestly contrary to fundamental domestic principles, requires careful and calibrated application. The evolution of the Indian court’s approach to the public policy exception in enforcing foreign arbitral awards provides a useful comparison. Early rulings interpreted the exception broadly, while later decisions applied it more narrowly and consistently. Achieving a similar approach quickly would benefit the cross-border insolvency framework. Beyond legal theory, factors such as institutional capacity, judicial training, communication protocols between courts, and professional growth within the insolvency sector will influence whether the framework works as intended.
Conclusion
The IBC’s first decade established the institutional foundations of a creditor-driven insolvency culture in India. The cross-border provisions introduced through Section 240C represent the next phase of that development, one that engages with the transnational character of modern corporate distress rather than treating it as an exception to domestic rules. The legislative framework is now in place. The harder task of building the jurisprudence, institutions and professional capacity to support it lies ahead. How that task is approached will determine whether this reform achieves its stated objective of integrating India’s insolvency regime with the emerging standards of global restructuring practice.
*Anand Kumar Maurya Advocate, practising in Arbitration, Commercial Dispute Resolution, Banking & Finance, Insolvency, and Project & Infrastructure Law.