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Panel for adopting UN model on cross-border insolvency
News:
- The Insolvency Law Committee (ILC) has suggested amendments to India’s Insolvency and Bankruptcy Code (IBC) to align it with United Nations’ model to handle cross-border insolvency cases.
Important Facts:
- The ILC headed by Ministry of Corporate Affairs (MCA) secretary Injeti Srinivas recommended the adoption of the United Nations Commission on International Trade Law (UNCITRAL) Model Law of Cross Border Insolvency, 1997.
- The corporate affairs ministry will consider the recommendations and seek Cabinet approval to amend IBC.
- UNCITRAL Model Law provides for a comprehensive framework to deal with cross-border insolvency issues and has been adopted in 44 countries and, therefore, forms part of international best practices.
- About UNCITRAL:
- It was established in 1966, as a subsidiary body of the General Assembly of the UN with the general mandate to further the progressive harmonisation and unification of the law of international trade.
- Necessity of amending the IBC:
- The current law related to IBC applies to domestic companies only.
- Moreover many Indian companies have a global footprint and many foreign companies have presence in multiple countries, including India, which calls for amending IBC.
- Advantages of bringing Model Law:
- It will enhance the ease of doing business and protect creditors in the global scenario by providing increased predictability and certainty of the insolvency framework.
- Provide greater confidence generation among foreign investors.
- Provides a robust mechanism for international cooperation.
