This article has been published by Hardik Swant, pursuing a Certificate Course in Insolvency and Bankruptcy Code from LawSikho.

It has been published by Rachit Garg.


The Insolvency and Bankruptcy Code, 2016, since its inception, has been instrumental in inculcating the discipline of effective, efficient, accountable, and responsible corporate governance practices and the monitoring of the same for the Best Interest of Shareholders. The Code emphasizes that liquidation be the solution of the last resort when it comes to the resolution of and revival of a corporate debtor. This shall turn out to be a win-win situation for both the lenders and the debtors. Yet, there are some issues to be resolved, which we think will be addressed over a while and with the experiences gained from practices.

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The Code stands strong with the help of 4 Key Pillars, which are:

1. The Adjudicating Authority i.e. National Company Law Tribunal (hereafter NCLT) and the National Company Law Appellate Tribunal (hereafter NCLAT) as an Appellate body;

2. The Insolvency and Bankruptcy Board of India (IBBI), a dominant supervisory body for the Regulation of the Code;

3. The Insolvency Resolution Professionals, who are the backbone of the Profession, have a significant role to play in the liquidation of the Assets;

4. Information Utilities, which maintain the Financial Records of the Corporate Debtor.

The Government’s Resolve to tackle the Non-Performing Assets Crisis through the Enactment of this Code, and the recent incorporation of the National Asset Reconstruction Company and India Debt Resolution Company shows that it has been alive to the problems faced in practice and amended the Law time and again to suit the Needs of the future.

Speed is the Essence for working and effective implementation of the Bankruptcy Code”

A brief introduction to the cross-border insolvency

The Insolvency Law Committee (ILC) constituted by the Ministry of Corporate Affairs analyzed and submitted its report along with the Recommendations for the roadmap to effectively implement the provisions relating to Cross Border Insolvency (hereinafter referred to as CBI). This Committee noted that the existing provisions – Sections 234 and 235, do not provide a comprehensive base for CBI Matters. Given the Intensity of the Matter, and the requirement of in-depth research to inculcate the UNCITRAL Model Law into the Indian Insolvency Law, the committee submitted its report accordingly with the necessary Modifications to make it suitable for the overall economic and administrative purposes.

Some key Advantages of adopting the Mode Law with specific recommendations are as follows:

  • Increasing Foreign Investments
  • Flexibility
  • Protection of Domestic Interest
  • Priority to Domestic Proceedings
  • Mechanism for Co-Operation.

These provisions will create an internationally aligned and comprehensive insolvency framework for corporate debtors under the code which is essential in the globalized environment. Sections 234 and 235 of the Code, which revolves around entering into Bilateral Agreements and issuance of letters of requests to foreign courts by adjudicating authorities under the code meant an ad-hoc framework that is bound to delay and further increase uncertainties for creditors, debtors, and courts alike.

The Four Main Principles around which the Model Law is based are as follows:

1. ACCESS: the Model Law allows direct access for foreign insolvency professionals and foreign creditors to enter into agreements with their domestic counterparts with or without voting rights, giving them rights to participate in and commence domestic insolvency proceedings against a debtor.

2. RECOGNITION: The Model Law allows recognition of foreign proceedings and provides for remedies by domestic courts based on that. There is a concept of ‘Main’ and ‘Non-Main’ proceedings which goes- if domestic courts determine that the Debtor has its Centre of Main Interests (COMI) in the foreign country, that will be termed as Foreign Main Proceedings; if the domestic courts determine that the entity has an establishment based on carrying on of non-transitory Economic Activity, such will be recognized as Non-Main proceedings. Recognition as a main proceeding will result in automatic relief, such as the moratorium on the transfer of assets of the debtor, and allow the foreign authorities enhanced powers in handling the estate of the debtor. In non-main proceedings, such relief is at the mercy of the courts.

3. CO-OPERATION: The Model Law provides for cooperation between domestic and foreign courts as well as insolvency professionals. this cooperation is subject to guidelines to be notified by the central government and not DIRECT as such. Cooperation will also be provided to the proceedings that have not been recognized as either main or non-main.

4. CO-ORDINATION: The Model Law provides a framework for the commencement of domestic insolvency proceedings when a foreign insolvency proceeding has already commenced or vice versa. It also provides for the coordination of two or more concurrent insolvency proceedings in different countries by encouraging cooperation between the courts.

The Committee then consolidated views and recommendations from a broad range of Stakeholders based on a draft cross-border insolvency framework that was put up for public Comments. Deliberations were made upon relevant issues, the international practices were considered revolving around the domestic Legal principles including the ones laid down in the UNCITRAL Model Laws.

India’s stride towards a cross-border regime

In the year 2000, the ERADI Committee noted that with Sweeping changes brought about by the opening up of the economy, as a result of Globalization, the issues relating to Cross-Border have become more important today and in the years that would follow, and it was decided to make changes in the erstwhile Companies Act 1956.

Later on, another Advisory Group on Bankruptcy Law (the Mitra Committee) stated that Indian Law was not compatible with the standards set in international legal requirements and has not taken into consideration anything related to Cross Border relationships. Both Committees opined that there is a dire need to revamp domestic laws around Insolvency and Bankruptcy. 

Economic ramifications

India’s economic interaction with the rest of the world has seen a dramatic rise over the last three decades since the Economic Reforms of 1991 and has grown even more with the advent of our financial markets. Indian companies continue to expand across the globe.

Today, financial markets are a vast network consisting of credit, derivative contracts, collateral obligations, the market impact of overlapping asset portfolios, and the network of cross-holdings interacting in multiple layers across the board. The banking channel remains pre-dominant for cross-border capital flows with India, though external commercial borrowings have increased in recent years. As far as the role of the banks is concerned- intermediated cross-border trade credit accounts for about one-third of the global merchandise trade credit. importers in India largely meet their funding needs through buyer’s trade credit which may be influenced by both demand and supply side factors alike. Domestic banks generally cater to the trade finance needs of importers from the KEY and largely growing MSME sector while bigger corporates or conglomerates are serviced by foreign banks having an international presence to a great extent. Domestic banks with an international presence in the form of bank branches overseas – subsidiaries or representative offices have a higher share in the trade credit approvals in totality.

Therefore, as India continues to grow, Indian businesses shall continue to expand too along with the rise in the financial markets linkages, financial needs will also be met through resources across the world. in the same way, domestic businesses will be integrated into global ever-disrupting supply and value chains, hence exposing themselves to eternal influences. Cross-Border interactions, in the form of shareholder management, creditor-debtor, supplier-buyer, chain distributors, etc., would become a normal practice for businesses more than ever before. Failures and Insolvencies with Cross Border elements will be inevitable and we can say that India does not need a regime that is internationally acceptable and is rather itself capable of dealing with the complexities these situations may pose in the context of countries with which our economic interests are of paramount importance.

Existing legal alternatives for cross-border exchanges

India has acceded to the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters and also on the same convention signed a Treaty on Taking of Evidence Abroad in Civil and Commercial Matters in the year 2007 as they provide for mechanisms of cross border co-operation accessing judicial systems across.

In India, the Code of Civil Procedure (CPC), under sections 44A and 45, provides for the recognition and enforcement of foreign Judgements with few Exceptions noted elsewhere in the same statute. These sections maintain recognition and enforcement in the following manner:

1. Decree of foreign courts may be executed in the Indian territory, provided that, that court has similar stature and vested powers as the one domiciled within India. such decrees may have the same result as if given by a local district court.

2. Execution of decrees of the Indian courts outside the territory of our country under the mandate that the central government establishes a transferee court in that respective foreign country and that it is notified to the effect that the said decrees will apply to the such transferee court.

3. Section 51 of the CPC lays down the procedure for execution of decrees concerning the debts by either delivery or sale of property for repayment of the same, the appointment of an official receiver, and also arrest and detention with a reasonable opportunity for the debtor to be able to present his side.

These options are restricted to only the enforcement of the reciprocating decrees by respective courts, but not exactly the cooperation in proceedings, cooperation between the insolvency proceedings, etc., constrained by long-drawn judicial processes and the delays it may cause to come to a certain resolution. The sections mentioned above do not however cover Insolvency Matters directly which brings us to question the clarity of those provisions as far as applicability is concerned. 

UNCITRAL Model Law – An Indian Perspective

The World Bank noted that Insolvency proceedings may have International aspects and that the insolvency laws should provide for rules of jurisdiction, recognition of foreign courts, and the choice of law. The IMF on the other hand encourages its adoption as it provides an effective means of achieving cooperation and coordination among courts and administrators of different countries. India, being a member of the commission responsible for consulting, building, and promoting the model law, the chances of questions arising on the issue of the legitimacy of the law are limited. This Model Law is strongly recommended as the global solution for resolving cross-border issues.

The access and recognition of Indian legal proceedings will be easier in the jurisdictions which have already adopted the law. USA, UK, UAE, Japan, Korea, Singapore, & Mauritius are the countries with which India has significant economic ties and has successfully adopted the Model Law, and is expected to be a signaling factor giving a sense of fear of missing out the countries which are yet to join in.

Arguments in favor of the model law would be the nature of the same being flexible and accommodative of the domestic policies with the country-specific necessary changes, the only issue is that it is more of a rules-based approach rather than being a principles-based one preventing its integration into other domestic laws.

Other concerns relating to the Model Law

1.  It gives a wide range of powers to foreign representatives without any regulatory checks or interventions which may not be well digested by the Legislators in the Host country. The only need is to provide legal assurance to the domestic creditors and the courts that their interests would be adequately protected and have preference over the foreign reps as far as the debtor’s assets’ distribution is concerned.

2.  It cannot address the issue of conflicting laws in cross-border insolvency, however, it does allow for the CBI agreements which have been used effectively by parties to address the issue.

3.   Differing interpretations were offered to the important provisions of the Model Law in the UK and USA courts even when both these countries have adopted the same questioning the integration of the same with Domestic Laws.

4. At the core of economic imperatives, are the financial instruments and multinational conglomerates with cross-border value chains managed through subsidiaries. There is no clear mention of this in the Model Law in question.

Jet Airways India Pvt. Ltd.- the case study

Jet Airways happens to be one of the biggest Failures that Corporate India has seen. Let us take a deep dive into the Twists and Turns, including the Cross-Border issues, which led to the fate of the Airlines going into the long-standing cumbersome Bankruptcy Process. The then-defunct Corporate Debtor is now in the process of Returning to the Industry with a Bang with a new CEO Mr. Sanjiv Kapoor, who has an impeccable record of Turning around failing Airlines.

Jet Airways declared Bankruptcy on 17th April 2019 temporarily after notifying the about its Collapse in the Market and decided to shut down Operations for time being. Little did they know how long was it going to take a stand on its Ground. The assets that it held passed onto other Competitors and some remained parked awaiting the process to complete.

The History of Jet Airways

What started with only 4 leased Boeing 737 Aircraft in 1993 by Founder-Chairman Mr. Naresh Goyal became an Epitome of Success for Private carriers over time in India. Thereafter the Industry saw more Private low-cost Passenger carriers rising from scratch and giving competition to the bigger and more well-established ones like the Jet itself.

The Company started seeing itself in a soup when it postponed its financial results posting while it made a default in its Debt Repayments to HSBC in the Middle East and also to the consortium financiers led by the State Bank of India in the 2nd quarter of 2018. That’s when the Government stepped in with the Directorate General of Civil Aviation and began conducting due diligence and a host of Audits including the financials and many discrepancies were discovered. The Audits were also the result of a tip-off to the government indicating the deferment of salaries to the employees affecting the morale of the employees and their hardships due to non-payment. This phase ended with the jet posting a loss of over Rs. 1300 crores bringing another shock to the market as it was also trying to grasp the reality of the near-collapse situation of an NBFC as large as ILFS in Mumbai around the same time.

All of this further intensifies when the income tax authorities conducted a search and seizure operation in the Mumbai and Delhi Offices of the Defunct after which Founder -chairman Naresh Goyal came under the lens of the Investigating authorities resulting in a Red-Corner Notice being issued against the Goyal couple who stepped down from their board roles on 25th march 2019 and also they were stopped from leaving India. multiple charges of money laundering and foreign exchange violation were punched against him and back-to-back interrogations by the ED, and CBI followed, finally leading to the chargesheet being filed for the various offenses- defrauding banks and misappropriation of funds.

With the Last Flight from Amritsar to Mumbai, the airline announced its decision to shut down the Operations affecting over 20000 employees and their Families. The National Aviator’s Guild (NAG) appealed to the Prime Minister’s Office (PMO) and the Government then put the then Aviation Minister Shri Suresh Prabhu in charge of the situation to save the day for those affected. The government also urged the banks to help try and save the airline without going through the bankruptcy route but this was not going to last long as the water went over the head with the corporate debtor and millions if not billions were at risk for the banks and ultimately for the economy as a whole. The Jet Airways Employees’ Union also tried to take over the Management of the Company but the deliberations fell apart as the plans presented were not viable and would have led to further destruction of fast-falling values of the assets leaving the lenders with the only option of full-fledged Bankruptcy proceedings against the Debtor.

It has been observed that the Common Link between all of the Failures in the Indian Aviation Sector, has been a MERGER at some point of time in the Lives of Defunct airline companies: Kingfisher- Air Deccan, Jet Airways-Sahara, and also a well-known merger of Indian Airlines with a Larger public sector carrier- the ‘Maharaja’ of the Indian Skies- as we like to call it – The Air India– which is now in the Expert Hands of the House of Tatas’. These cases establish the fact that Mergers and Acquisitions exercises in Airlines are Risky.

The Merger with Sahara, Rebranding, and Mis-management

The Merger with Sahara Airlines was a miscalculation on the part of Jet Airways as it was acquired for $500 million, a price much above the actual Worth of the carrier. This merged entity was later renamed JetLite which the customers could not relate to and detached them from both brands. As a result, they started moving to other better Low-Cost carriers.

Later on, the Founder-chairman Naresh Goyal decided to take up the mantle and become a one-man-army of the merged entity without hiring a sound board of directors to assist him with the management of the airlines disregarding the corporate governance principles of management. The Seniors often spoke about his unsound Financial Acumen of him and the absence of a proper Delegation matrix and specialized departments to manage both airlines. All of this led to Mismanagement and in-fights among the Board Members further affecting the Morale of the very driving force of any company – The Employees- right from the Top to the Junior-most one.

The brief of the protocol as approved by the National Company Law Appellate Tribunal, New Delhi

In honor of the Directions of the NCLAT, the Administrator of ‘Jet Airways (India) Limited (offshore regional hub in the Netherlands) and the Resolution Professional of Jet Airways (India) Limited filed their Terms and Conditions of operations as “Cross Border Insolvency Protocols”.

The Clauses of the same are as follows:

1. Mr. Ashish Chhawchharia, in his capacity as the Insolvency Professional of Jet Airways (India) Limited, a company incorporated under the provisions of the erstwhile Companies Act, 1956 and an existing company under the Companies Act, 2013 and having its registered office at the Siroya Centre, Sahar Airport Road, Andheri East-400099 appointed by the NCLT Bench at Mumbai on 20/06/2019; and

2. Rocco Mulder, in his capacity as the Administrator in Bankruptcy of the Company appointed by the Noord-Holland District Court, trade, Sub-district and insolvency in the Netherlands by its court order dated 21/05/2019 (Dutch trustee) each a Party and together be called as parties.

A)  The Company was subject to parallel Insolvency Proceedings in India and the Netherlands.

B) In India, the Company has been admitted into a Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.

C) In the Netherlands the Co. has been declared bankrupt and a Dutch Trustee has been appointed to manage the Estate of the Co.

D) The Parties facilitated and formulated the proposed Co-Operation with the Protocol.

The Parties agreed to the following:

  • The Purpose: The Parties agree to maintain that the Indian Proceedings are focused on the revival/Resolution of the Co. and the maximization of the value of the assets for the stakeholders and that of the Dutch proceedings was to deal with the liquidation of the assets of the Co.
  • The parties recognize that the company is an Indian company with its center of main interest in India and the Dutch proceedings were non-main ones. for that, the parties also agreed to co-operate and co-ordinate, communicate the necessary information and data sharing pacts, preservation and maximization of the values of assets of the co. Worldwide, effective management and prioritizing of the claims and their effective and transparent reconciliation maintain the comity as regards independent jurisdiction, sovereignty, and authority of ours and Dutch bankruptcy courts.
  • Effectiveness: The Terms of this Agreement on Protocols became effective on Approval of the NCLT/NCLAT in India and subsequent approval of the Dutch Court.
  • Communication and information: For matters of material concerns to either of the parties, the parties are expected to liaise with each other and form a ‘Quid Pro Quo’ over the same. In case the proceedings are carried out in a Dutch court, it is to be maintained that the Indian Counterparties will be kept in the loop for decision-making.
  • Rights to Appear and Attend: The Parties shall have the right to appear in Person or be represented in the proceedings subject to the laws prescribed in each of the jurisdictions.
  • The Parties strived and have made efforts to Co-operate, maintain and preserve the value of the assets of the Company which are located in the Netherlands.
  • To Enable each party to fulfill its obligations and to ensure a complete ad effective overview of the claims, creditor claims were submitted by the relevant applicable Law per jurisdictions.
  • Insolvency Resolution Process Costs: the COC is to include the costs and fees incurred by the Dutch Administrators for any advisor/professional engaged by it for Dutch Proceedings. This is to be paid as per the Law of the Land in India subject to verification by the RP in Indian Proceedings.
  • The Moratorium shall be applied as per Section 14 of the Insolvency and Bankruptcy Code, 2016 against any existing proceedings under any law anywhere in the world as far as the duration of Insolvency proceedings is concerned.

The Winning Resolution Plan and all set for the Revival in 2022:

A UAE-based Indian origin Businessman – Murari Lal Jalan and a London Based firm- Kalrock Capital in consortium went on to win the bid for Jet Airways having a viable Resolution Plan to save the Co. proposing a total cash infusion of Rs. 1375 Crores including the Rs.475 Crore which would go into paying the Stakeholders and other Financial/Operational Creditors.

The New Promoters mentioned above chose to go with the Jet Brand, mainly due to its brand value and customer connections. The Union Home Ministry has already given Security Clearances to Jet Airways 2.0 as per the News dated 08/05/2022 and with its new HQ in Delhi, it is all set to relaunch its commercial flight operations in the current Financial Year. The Focus will be on Cargo Operations apart from the obvious Passenger centric to improve the airline. Delhi, Mumbai, and Bengaluru continue to remain hubs for Jet 2.0 to support tier 2 and 3 cities with sub-hubs. The Aim is to re-energize the brand by infusing energy, warmth, and vibrancy into it while making it bigger and better. It is currently going through a Court-monitored process and plans to return with a combination of premium and no-frills services.


The Alternatives that we’re talking about have their benefits and Limitations. The adoption and the advocacy that persists for the Model Law across the Board is fine but the selective adoption of certain clauses of the same Model Law by the countries relevant to India does not make it an attractive piece of law. It is difficult to cut or ignore any part of the Model whatsoever as it is in itself a book containing case experiences of almost a century with varying approaches to deal with Insolvencies while it still has gaps w.r.t keeping the Financial Entities out of its Ambit. This Gap is of utmost concern as it does not go in line with the requirements of a Globalized World which is also deeply integrated financially. As a result, it becomes disadvantageous for India to adopt the Model Law if it has to put in place a regime inculcating Cross Border Insolvency and the Principles around it making it difficult to make it work that way.

It is an Obligation on India’s part to think beyond the Model Law. The Financial Stability Board (FSB) of India, while working closely with the G20 laid down a set of principles that would make the Cross border Resolution of Banks and Financial Institutions practically effective as they are not just drawn from the Model Law but also go beyond it and can prove a better starting point to formulate and expand the provisions laid down in Sections 234 and 235 of the Code. Keeping in view the Economic Interests of the country, the adoption of the Law by examining country-specific cases, especially the ones in the Major financial hubs of the World will go a long way in setting precedents based on which India can move ahead with the same having Ground Breaking impact in the Law itself suiting the Country and maintaining the Best Practices in the World.

References on Government’s readiness for bringing up Cross Border issues w.r.t Insolvencies and Bankruptcies.


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