Cross-Border Insolvency Under the IBC
Two sections in force, one tribunal-made protocol, and a 2026 power that is still waiting to be switched on.
Cross-border insolvency asks two questions. Can an Indian resolution professional reach a corporate debtor's assets abroad? And can a foreign insolvency office-holder be recognised and act in India? The Code in force answers the first only partly and the second not at all.
Two sections do the work today: section 234 (agreements with foreign countries) and section 235 (letters of request). Neither creates a procedure for recognising a foreign proceeding. The 2026 amendment inserted a rule-making power for that, section 240C, but it has not been brought into force.
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The Two Sections in Force
- Section 234: agreements with foreign countries
- The Central Government may enter into an agreement with the government of any country outside India to enforce the Code. It may then direct, by notification, that the Code applies to assets of a corporate debtor or debtor (including a personal guarantor of a corporate debtor) in a country with which reciprocal arrangements have been made, subject to conditions.
- Section 235: letter of request
- If the RP, liquidator or bankruptcy trustee believes assets are in a country with which reciprocal arrangements exist under section 234, it applies to the Adjudicating Authority. If satisfied that evidence or action is needed, the Adjudicating Authority may issue a letter of request to a competent court or authority of that country.
Using Section 235: The Sequence
- 1
1. Locate the asset
Say a ₹40 crore receivable owed to the corporate debtor by a buyer in another country.
- 2
2. Check for a reciprocal arrangement
Section 235 applies only where an arrangement has been made with that country under section 234. Without one, the section does not help.
- 3
3. RP applies to the NCLT
The RP cannot write to the foreign court directly under the Code. The application goes to the Adjudicating Authority.
- 4
4. NCLT issues a letter of request
Addressed to the foreign court or authority competent to deal with it. What that court does is governed by its own law.
Jet Airways: Cooperation Without a Statute
Jet Airways (India) Limited went into parallel proceedings: bankruptcy in the Netherlands, with an administrator appointed by a Dutch court on 21 May 2019, and CIRP in India, admitted by the NCLT Mumbai on 20 June 2019. The NCLT observed that the Dutch court had no jurisdiction. The Dutch administrator appealed.
The NCLAT (Company Appeal (AT) (Insolvency) No. 707 of 2019) directed the RP to agree terms of cooperation with the Dutch administrator. On 26 September 2019 it approved a "Cross Border Insolvency Protocol" under which India, as the company's centre of main interests, ran the main proceeding and the Dutch case was non-main. It inserted a clause letting the Dutch administrator attend CoC meetings as an observer without a vote, made the protocol a binding direction, and set aside the NCLT's observation on Dutch jurisdiction.
The protocol rested on the tribunal's directions, not on any recognition provision in the Code. That is the gap section 240C is meant to fill.
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Section 240C: Enacted, Not in Force
The IBC (Amendment) Act, 2026 inserted section 240C, letting the Central Government prescribe how cross-border proceedings are conducted, including recognition of proceedings, relief, judicial cooperation and coordination, for notified classes of debtors and notified countries, and designate NCLT benches for them. For this section, "corporate debtor" includes a limited liability entity incorporated outside India. Draft rules must be laid before Parliament for 30 days. Section 71 of the amending Act was not in the 26 May 2026 commencement notification, so none of this applies yet.
How the Limited Insolvency Examination Tests This
At the 4 February 2025 cut-off the examinable law is sections 234 and 235 alone, so the questions are about mechanics: who applies (the RP, liquidator or bankruptcy trustee), to whom (the Adjudicating Authority), what issues (a letter of request), and the precondition (a reciprocal arrangement under section 234).
The traps are answers that sound modern: that an Indian RP can apply directly to a foreign court, that a foreign administrator can seek recognition from the NCLT under the Code, or that India's cross-border rules are in force. None is correct at the cut-off, and the last is still not correct today.
FAQs
Does India have a cross-border insolvency law?expand_more
Only sections 234 and 235 of the Code, which depend on reciprocal arrangements with other countries. Section 240C, inserted in 2026 to allow rules on recognition and cooperation, has not been brought into force.
What is a letter of request under section 235 of IBC?expand_more
A request issued by the Adjudicating Authority, on the application of the RP, liquidator or bankruptcy trustee, to a court or authority in a reciprocating country, seeking evidence or action on the debtor's assets there.
What happened in the Jet Airways cross-border insolvency case?expand_more
The NCLAT directed the Indian RP and the Dutch administrator to cooperate and, on 26 September 2019, approved a protocol treating India as the main proceeding and the Dutch proceeding as non-main, with the Dutch administrator allowed to attend CoC meetings as a non-voting observer.
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