For years, India's insolvency framework had a well-known blind spot: no real mechanism for handling cases where an insolvent company had assets, creditors, or proceedings spanning multiple countries. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 finally starts closing that gap.
What existed before — and why it didn't work
The original IBC contained Sections 234 and 235, meant to address cross-border insolvency through bilateral agreements with other countries and letters of request to foreign courts. In practice, these provisions were never meaningfully operationalised — no bilateral agreements were signed, and the mechanism went essentially unused. Cases like Jet Airways, where creditors and proceedings spanned multiple jurisdictions, exposed exactly how big the resulting gap was.
What the 2026 Amendment actually adds
The amendment inserts a new Section 240C, empowering the central government to frame cross-border insolvency rules. Critically, these rules are being designed to align with the UNCITRAL Model Law on Cross-Border Insolvency — the internationally recognised framework that dozens of countries have already adopted, rather than a bespoke Indian mechanism built from scratch. That alignment matters: it means foreign courts and insolvency professionals operating under the same Model Law elsewhere will find India's new framework familiar rather than novel.
What the framework will cover
Based on the Model Law template India is aligning with, the rules are expected to address: recognition of foreign insolvency proceedings in Indian courts, relief available to foreign representatives acting on behalf of overseas insolvency processes, and cooperation mechanisms between Indian and foreign insolvency professionals handling the same distressed entity.
The catch: the rules aren't written yet
The amendment received presidential assent around April 2026, but as of now the actual cross-border insolvency rules are still being drafted and have not been notified. Section 240C is an enabling provision — it creates the legal authority for the government to act, but the operative detail that practitioners actually need is still pending.
Why this matters now
For multinational creditors and restructuring advisors, this is the moment to start tracking the rule-making process closely rather than waiting for a finished framework to appear — the Model Law template gives a reasonably good preview of what's coming, and early engagement with the consultation process is the best way to flag jurisdiction-specific issues before the rules are finalised.
Sources: Maheshwari & Co. · IBC Laws · Corp Law Updates