Mainstream WeeklyThe IBC Amendment Bill, 2026 finally equips India with the tools to resolve multinational insolvencies - but questions of implementation remain
In today’s global world, where business and economic activities are not confined to its territorial states, in such scenarios business failure of one corporate entity can have ripples effects across different jurisdictions. Insolvency and Bankruptcy Code 2016 enacted nearly a decade back bought a paradigm shift and complete overhaul to the domestic insolvency regime in India, but the code lacked the legal framework to deal with the cross-border insolvency. Recently this gap has been finally addressed by the government, as Union Finance Minister Nirmala Sitharaman introduced the bill in Lok Sabha on March 2025 and which got the president assent on 6th April 2026. IBC (Amendment) Bill 2026 is a sweeping reform package that will provide structured and comprehensive legal framework for the multinational default.
Cross-border Insolvency or International Insolvency arises when the corporate debtor holds assets in multiple jurisdictions, or its creditors are spread across multiple countries. In such scenarios key vital questions arise are: which county will be governing the entire legal proceedings, identification of the competent forum and will the order issued by the one court be enforced by the other? These issues are central to ensuring effective and coordinated resolution of cross-border cases. In 1997 the UN General Assembly has adopted UNCITRAL Model Law on Cross-Border Insolvency which provide a blueprint for the countries to align their laws with the global standards. Major economies such as USA, UK, Singapore has already incorporated it into their domestic legal regime. As India’s is leaving is footprint in the global market the absence of cross-border insolvency framework represented an anomaly in its legal system. And the result was one-sided asymmetry: Indian creditors could benefit from UNCITRAL-based protections in foreign courts, but foreign creditors had no reciprocal recourse in India.
Since the inception of the code, it has fundamentally transformed the business landscape of the country by improving credit culture, improved recoveries and boosting the investors confidence. The impact of the reforms has been reflected through IBBI data and world Bank report which recorded India’s rise from 142 position in 2014 to 63rd position in 2020 in the global ease of doing business ranking. Since the implementation it has enabled improved resolution outcome where creditors realizing over 4.32 lakh crores through resolution plan delivering 171% of liquidation value on average till match 2026. Banking sector being one of the backbone of the country has been greatly benefited by this, the recovery rates under the code also have been improved significantly nearly 37% in FY2024-25, up from 28.3% in the previous year. During the year alone ₹54,528 crore recovered from bad assets. The credit discipline introduced has contributed the steady improvement in Gross NPAs of scheduled commercial banks which has declined to a multi-decadal low of 2.58% as of March 2025. These figures shows that code has been evolved as the critical pillar of matured market economy.
The IBC (Amendment) Bill 2026 further strengthened the India’s image at the global platform by the incorporation of the rules and provisions for administering and conducting the cross-border insolvency cases. Indian Adjudicating authorities would now be empowered to acknowledge the foreign proceedings and cooperate with the foreign courts with respect to the matters concerning the same corporate debtor. This reciprocal arrangement will prevent the uncoordinated and parallel proceedings across jurisdictions which earlier have caused asset dissipation and unequal treatment of the creditors. A case in 2025 also underscores the need for this reform when Singapore High court in the case of Re Compuage Infocom Ltd. recognise the India CIRP as the main proceedings. The case highlighted the international recognition of Indian insolvency proceedings, but India’s own legal framework remained unequipped to extent the similar recognition.
The bill has been widely welcomed by legal and economic experts and garnered great support from industry stakeholder who believes it will align India with international best practices and improves investor’s confidence and facilitate smooth execution of cross-border cases. The code has already improved EoDB ranking and by further adding international credibility it will further boost foreign direct investment and long-term capital.
However, the critics argued that the bill only proposes the enabling provisions that empower the central government to formulate the details rules at a later stage, as it does not itself constitute the complete operational framework. Recognising these limitations select committee suggested the introduction of the clearer framework and specified timelines for the appeal before the NCLAT. As in absence of such detailed rules, ambiguities will persist and create scope for litigation and delay.
The bill represents the 8th amendment since the enactment which is the testimony to the iterative efforts to bridge the gaps in the India’s most important economic reform. Cross-border insolvency framework even its enabling form represents a policy shift, reflecting India’s commitment to harmonizing its insolvency regime with globally accepted standards and fostering greater confidence among international investors.
(Author: Dr. Sandhya Sharma is faculty member of Law at Christ (Deemed to be University) Pune India. )