From Jet Airways to Section 240C : Has India's IBC Amendment Act, 2026, Finally Unlocked Cross-Border Insolvency?

Introduction : When a multinational corporation becomes insolvent, the legal complications extend far beyond the borders of a single country. Creditors are located across several jurisdictions; assets may be situated in different territories and group entities may be incorporated under separate legal systems. In such situations, determining the applicable insolvency provisions and coordinating parallel proceedings is an inherently complex exercise. 

Until recently, Indian insolvency law offered little guidance on these issues. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (“Amendment Act”) seeks to address the legislative step by introducing Section 240C for cross border insolvency. While the enactment represents a significant step towards aligning India’s insolvency regime with international practice, the extent to which the framework will operate effectively in practice remains uncertain. 

The Problem the 2026 Amendment Inherits 

The Insolvency and Bankruptcy Code, 2016 (“IBC”) addressed cross-border insolvency through two provisions that are Section 234 and 235. These two provisions have achieved the rare distinction of being simultaneously present in the statute while being absent in practice. Section - 234 gave the Central Government the power to enter into bilateral agreements with foreign states for the Code to be enforced. Section 235 empowered the Adjudicating Authority to issue letters of request courts in reciprocating territories. As of early 2026, no bilateral agreement has been notified under Section 234 and as Section 235 was premised on the existence of such reciprocating territories, its effectiveness was also unworkable.

Both the provisions suffer from an absence of the conceptual architecture that modern cross-border insolvency regimes require. There is no recognition of foreign proceedings, no mechanism for a foreign representative to appear before the NCLT, no acknowledgement of Centre of Main Interests (“COMI”), no distinction between foreign main and non-main proceedings, no automatic cross border stays and no framework for judicial co-operation. What existed was a legislative skeleton, an outline without any substance.

The Jet Airways Case

Jet Airways is one of the most significant stress-tests for India’s cross border insolvency framework. The time when Jet Airways was admitted to Corporate Insolvency Resolution Process (CIRP) in the NCLT, Mumbai Bench, by an order dated 20 June 2019, concurrent insolvency proceedings were already initiated by the Noord-Holland District Court in the Netherlands and it had appointed a bankruptcy trustee (“the Dutch Trustee”) by an order dated 21 May 2019 that is a month earlier than the NCLT order. The initial response of NCLT was not co-operative accommodation as it declared the Dutch proceedings a nullity and asserted exclusive jurisdiction over the matter. The reason behind the same was Section 234 and 235 of the IBC had not been operationalised and there was no reciprocal arrangement with the Netherlands.

The Dutch Trustee then appealed to the NCLAT in Company Appeal (AT) (Insolvency) No. 707 of 2019. The NCLAT took a symbolically different approach. Rather than affirming the tribunal’s outright rejection, the appellate tribunal directed the Indian Resolution Professional to co-operate with the Dutch Trustee and explore the feasibility of a joint insolvency process. The NCLAT was not merely facilitating a voluntary agreement rather it was actively directing one. Records indicate that it was involved in resolving specific disagreements over the protocol’s terms, including the Dutch Trustee’s right to participate in Committee of Creditors meetings as an observer.

The resulting Cross Border Insolvency Protocol identified India as the jurisdiction of the main proceedings and the Netherlands as the non-main, borrowing COMI (adjacent language from the UNCITRAL Model Law). Hence, this is less a product of professional goodwill and more a product of judicial compulsion. The NCLAT effectively authored the co-operation that the tribunal had refused. This distinction exposes how fragile comity-based co-operation is when the tribunal of first instance can declare parallel proceedings void and how much the entire process dependant upon the appellate tribunal’s appetite for engagement. This was an example of judicial improvisation at its most precarious.

The 2026 Amendment: Section 240C in Context

The 2026 Amendment Act received Presidential assent on 6^th April 2026 (Act No. 6 of 2026). This Act inserted Section 240C into IBC, conferring upon the Central Government power to make rules for cross border insolvency. This covered recognition of foreign proceedings, judicial co-operation and co-ordination of insolvency proceedings across jurisdictions. The Central Government may also designate specific NCLT benches to handle cross border matters and adapt provisions of IBC or The Companies Act, 2013 as will be required for cross border related matters.

Additionally, Section 240C also expands the definition of “corporate debtor” by including entities incorporated with limited liability outside India. This is a provision of real significance for foreign subsidiaries of Indian groups and for foreign entities with Indian creditors. 

It is important to note that Section 240C is unambiguously an enabling provision and itself does not establish any procedures to recognize COMI based jurisdiction, an automatic moratorium period upon recognition of foreign main proceedings or direct access rights for foreign representatives before the NCLT. The substantive architecture is deferred entirely to delegated legislation. Before the Amendment Act, 2026, India had not formally adopted or incorporated the UNCITRAL Model Law on Cross-Border Insolvency, 1997 and the stand remains the same after the Amendment. Section 240C neither enacts the Model Law nor expressly mandates that rules framed thereunder be consistent with it.

Separately, the Amendment Act also introduces group insolvency provisions under Chapter VA, Section 59A. This is a standalone structural addition and is distinct from Section 240C. This provision empowers the Central Government to prescribe rules for co-ordinated insolvency proceedings for two or more corporate debtors forming part of a group (that is defined by control or significant ownership of 26% or more voting rights). The two frameworks are conceptually interdependent. A multinational corporate group presents both a group coordination challenge and a cross-border coordination challenge simultaneously. However, they are housed separately in the statute and cannot be operationalized in absence of notified rules under either provision.

The UNCITRAL Model Law: The Road Not (Yet) Taken

The UNCITRAL Model Law on Cross Border Insolvency (1997) provides the international template for managing transnational insolvency. It is built around four pillars- access, recognition, relief and co-operation. It introduces COMI as the determinative factor for characterizing a foreign proceeding as “main” or “non-main”. It further provides for automatic stay upon recognition of foreign main proceedings and grants foreign representatives direct access to domestic courts without any treaty predicate. Over 50 jurisdictions have adopted it which included the United State of America (Chapter 15, US Bankruptcy Code) and the United Kingdom (Cross Border Insolvency Regulations, 2006), and Singapore (Companies Act amendments, 2017).

The Model Law is the most logical template to frame rules under Section 240C. Additionally, UNCITRAL aligned rules would signal to international creditors and investors that Indian insolvency proceedings operate within a recognised multilateral framework and reduces jurisdictional risk pricing in cross-border credit markets. It further aligns India with the standard against which its insolvency infrastructure is evaluated by foreign institutional investors. 

However, NCLT faces well- documented challenges such as bench vacancies, caseload pressure and limited depth in comparative insolvency expertise. Cross-border proceedings involve foreign law, jurisdictional co-ordination and the prospect of conflicting court orders and all this will strain an already burdened system. A dedicated bench, which Section 240C explicitly enables, would help to some extent in addressing this issue.

However, it will be fruitful only if accompanied by specialised appointments and genuine IBBI capacity-building in cross-border mandates. Further the reciprocity question is also a live constraint. The Model Law does not require any treaty-based reciprocity and a state may recognise foreign proceedings regardless of whether the foreign state has adopted the Model Law. It can be argued that India’s political economy may push toward a more cautious, reciprocity and conditioned approach, particularly given the unactivated bilateral agreement mechanism under Section 234. In case the rules framed under Section 240C reintroduces a reciprocity requirement, the operational scope of the framework will be very limited.

The Enabling Provision Problem

The legislative history of India gives reason for caution here. In the early years IBC saw significant friction in statutory intent and the pace of rulemaking. Enabling provisions without notified rules provide no actionable rights. A foreign representative seeking recognition of overseas insolvency proceedings before the NCLT today cannot invoke Section 240C as it confers no rights of access, establishes no recognition procedure and creates no moratorium. The operational vacuum of Section 234 and 235 has not been filled rather it has been reframed elegantly.

Conclusion

The Amendment Act can be best understood as a promissory note which is commercially significant only if its honoured. The question is now- has India really moved toward modified universalism, the framework under which domestic courts give co-operative effect to a lead jurisdiction’s insolvency proceedings while retaining sovereign control over local matters? The honest answer to this is- Not Yet. The 2026 Amendment places India at the threshold of that position. Now whether the door opens will depend entirely on the quality and ambition of the delegated legislation that follows. Additionally, other factors include the NCLT’s institutional readiness and the Central Government’s appetite for the policy commitments which a UNCITRAL aligned framework implicitly requires.

Author: Pragyan Sucheta Panda, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

Endnotes

1. Insolvency and Bankruptcy Code (Amendment) Act, 2026, No. 6 of 2026, Gazette of India, Extraordinary, Part II, § 1 (Apr. 6, 2026) (introducing § 240C and provisions relating to cross-border insolvency and group insolvency).

2. Insolvency and Bankruptcy Code, 2016, §§ 234, 235, 240C, No. 31 of 2016, India Code (as amended by the Insolvency and Bankruptcy Code (Amendment) Act, 2026).

3. State Bank of India v. Jet Airways (India) Ltd., Company Appeal (AT) (Insolvency) No. 707 of 2019, National Company Law Appellate Tribunal (Sept. 26, 2019).

4. UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation, G.A. Res. 52/158, U.N. Doc. A/RES/52/158 (Dec. 15, 1997), https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency.

5. Insolvency Law Committee, Report on Cross Border Insolvency (Ministry of Corporate Affairs, Oct. 2018), recommending adoption of the UNCITRAL Model Law with suitable modifications.

6. United Nations Commission on International Trade Law (UNCITRAL), Status: UNCITRAL Model Law on Cross-Border Insolvency (1997), https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency/status (listing jurisdictions that have adopted the Model Law).