CROSS BORDER INSOLVENCY

CROSS BORDER INSOLVENCY

Topic: Economy

In news: The Economic Survey 2021- 22 has called for a standardised framework for cross- border insolvency.

About:

• The Insolvency and Bankruptcy Code (IBC) at present does not have an instrument to restructure firms involving cross-border jurisdictions.
• The proposal to frame a robust cross-border insolvency framework has already been highlighted in the report of the Insolvency Law Committee under Injeti Srinivas which had recommended the adoption of the United Nations Commission on International Trade Law (UNCITRAL), with certain modifications to make it suitable to the Indian context.

United Nations Commission on International Trade Law (UNCITRAL)

• UNCITRAL on Cross-Border Insolvency, 1997 has emerged as the most widely accepted legal framework to deal with cross-border insolvency is- sues,” the Survey said.
• It has been adopted by 49 countries so far, such as Singapore, the U.K., the U.S., South Africa and Korea.
• This law works on four main principles:
  • Access,
  • Recognition,
  • Cooperation
  • Coordination