The MCA invited public comments on the CBIRC draft and suggested modifications by December 15, 2021. Following the recommendations made in the report submitted by the Cross-Border Insolvency Rules/ Regulations Committee (the “CBIRC”) on draft rules, regulations, notifications, guidelines, and capacity building for cross-border insolvency, the MCA proposed to enact provisions on cross-border insolvency and said “…enacting legislative provisions on cross-border insolvency is essential to address the emerging issues on cross-border insolvency in recent cases under the Code. The introduction of cross-border insolvency law in the IBC that is in line with international best practices and suitable for the Indian context may be beneficial to all stakeholders.”
It further noted that the pre-packaged insolvency resolution process for MSMEs was just introduced, the law and practice governing the said mechanism are still in their early days, it is noted that applying cross-border insolvency provisions to the pre-pack process may not be appropriate at this time, and as a result, it is suggested that the pre-pack process be ignored.
Additionally, it suggested that financial service providers be excluded from the draft’s application of cross-border insolvency provisions while pointing out that this exclusion is consistent with the design of the Code because financial service providers are subject to a special insolvency process. It also stated that the Central Government may, if necessary, notify any other entities that should be excluded from the application of cross-border insolvency provisions.
Lastly, MCA suggested that all NCLT and DRT benches may have jurisdiction to decide applications under the proposal. This meant that cross-border proceedings arising about corporate debtors with registrations in India would be handled at the NCLT bench having jurisdiction over the registered office of the corporate debtor. Still, cross-border applications regarding any person incorporated with limited liability outside of India could be handled by the principal Bench of NCLT.
