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Topic -Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
5) The draft on cross-border insolvency, recently released by the government will ensure an effective resolution mechanism in place for cross-border insolvency. Discuss.(250 words)
Why this question
Many insolvency and bankruptcy proceedings undergoing in India involve cross-border presence of company’s assets. Therefore it is necessary to have a mechanism in place in order to solve cross-border insolvency cases. The issue is related to GS-3 syllabus under the following heading –
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Key demand of the question.
The question wants us to write in detail about the salient provisions of the draft on cross-border insolvency, recently released by the government and explain how they will lead to an effective resolution mechanism to resolve cross-border insolvency.
Discuss- this is an all-encompassing directive which directs us to write at length about the salient provisions of the draft on cross border insolvency and also discuss how it will lead to an effective resolution mechanism to resolve cross-border insolvency.
Structure of the answer
Introduction – mention that in many of the ongoing cases under the IBC, several companies have assets and operations outside India, for which a legal framework is required to deal the assets overseas.
- Discuss that the existing IBC provides for two Sections –234 and 235 — relating to cross border insolvency but these are not adequate. Mention that under section 235, India may issue a letter of request to a court or an authority competent to deal with such request, of the foreign country.
- Discuss in points the salient provisions of the draft and bring out how the draft will place an effective mechanism to deal with cross-border insolvency. E.g the central government after entering into agreement with other countries, may bring overseas asset of a domestic corporate debtor into consideration of insolvency resolution in India, can be extended to cases of personal insolvency resolution as well, in line with UNICTRAL Model Law on Cross-Border Insolvency and thus cooperation can be sought from other countries who have adopted the model law etc.
Conclusion– Form a fair and a balanced opinion on the issue, based on your discussion.