By James Mathew
IL&FS group's plans to sell stake in its $79 million robotic car parking project at Dubai Courts could also go through under the new mechanism
India will soon set up a cross-border framework for dealing with insolvency cases involving assets and creditors of insolvent companies spread across various geographies, a move which is expected to see faster resolution of cases such as Jet Airways and UAE-based subsidiaries of bankrupt IL&FS (Infrastructure Leasing & Financial Services Ltd).
“Though foreign creditors and vendors can make claims for their loans and dues from Indian companies which are under insolvency under the newly enacted Insolvency and Bankruptcy Code (IBC) law, the proposed cross-border framework will adopt a model law – in the lines of UNCITRAL Model Law – to provide added avenues for dealing with their claims,” a senior official of the Corporate Affairs Ministry, told Arabian Business.
“The proposed amendments to the IBC Act will also provide recognition of foreign insolvency proceedings, foster cooperation and communication between domestic and foreign courts and insolvency professionals,” the federal ministry official said.
The amendment bill to the IBC, which envisages cross-border framework to deal with insolvency cases, is expected to be introduced in the winter session of Indian Parliament, during its sitting from November 18 until December 13.
Insolvency cases such as the grounded Indian airline Jet Airways, which has Etihad as a foreign investor and several international companies as its aircraft leasing agencies and other vendors, have been stuck at India’s insolvency court, partly because of parallel legal proceedings for claims on its assets by foreign lenders and vendors in their respective countries.
Similarly, the bankrupt IL&FS group’s efforts to sell stake in the $79 million robotic car parking project at Dubai Courts of Park Line LLC, a subsidiary of IL&FS Transportation Networks Ltd (ITNL) and NextGen Parking (NGP), part of the Dubai-based KBW Investments, have also hit hurdles in the absence of cross-border framework to deal with foreign assets of insolvent Indian companies.
Globally, the UN model law - UNCITRAL - has emerged as the most widely accepted legal framework to deal with cross-border insolvency issues and legislation based on the model law has been adopted in 44 countries in a total of 46 jurisdictions.
“Once the amended IBC bill gets parliament approval, we will begin the process of signing bilateral and multilateral treaties with countries which have not yet adopted the UNCITRAL Model Law,” the official of Corporate Affairs Ministry, which spearheads the Bill, said.
The proposed model law incorporates a robust mechanism for cooperation and coordination between courts and insolvency professionals, in foreign jurisdictions and domestically. This would facilitate faster and effective conduct of concurrent proceedings.