From Territorialism To Modified Universalism: How Cross-Border Insolvency Reform Will Reshape Global Asset Tracing And Recovery

KEYWORDS

Cross-Border Insolvency, Modified Universalism, Territorialism, UNCITRAL Model Law, Centre of Main Interests, Insolvency and Bankruptcy Code, Asset Tracing, Substance-Over-Form, National Company Law Tribunal, Corporate Insolvency Resolution Process, Third-Party Litigation Funding, Environmental Social and Governance Compliance, Comparative Insolvency Law, Offshore Structures, Recognition of Foreign Proceedings, Distressed Assets, IBC Amendment Bill 2025.

ABSTRACT

For a very long time, India’s insolvency regulation was entirely territorial; foreign proceedings were not recognised, Indian courts denied help to foreign representatives, and cross-border recovery was barely coordinated. The Insolvency and Bankruptcy Code (Amendment) Bill 2025 features provisions inspired by the UNCITRAL Model Law on Cross-Border Insolvency, 1997. This change aligns with India’s willingness to participate in the global trend towards modified universalism, which is a cooperative framework that prioritises coordination among jurisdictions while also respecting local legal systems. The change is already demonstrable. Indian insolvency professionals pursue private guarantors through complex foreign layers of corporate structuring, trace the assets hidden through layers of corporate structures, and, in addition, coordinate with foreign officeholders in a manner that was not even imagined a decade ago. According to expert observers, India is like Brazil a decade ago, with a growing appetite for enforcement combined with efforts to familiarise practitioners with the available options, and investing early in preliminary measures. [1]

INTRODUCTION

In the year 2025, the Singapore High Court recognised Indian corporate insolvency proceedings as a “foreign main proceeding” in Re Compuage Infocom Ltd, by referring to the UNCITRAL Model Law as enacted in Singapore’s Insolvency, Restructuring and Dissolution Act, 2018.[2] Later the same year, the Calcutta High Court refused to lift a US bankruptcy prohibition, stating that Section 44A of the Code of Civil Procedure, 1908, limits recognition of foreign judgments to “reciprocating territories”, which exclude the US and most of the European countries.[3] These two rulings highlight the central paradox of India’s cross-border insolvency environment. Indian legal actions are gaining significant legal authority when they are executed abroad, whereas foreign orders have a hard time entering the country. India is a creditor to the world but not yet a debtor in any meaningful reciprocal sense.

This paradox goes beyond a mere technical problem. It imposes real costs on international creditors, leading to incorrect pricing in cross-border debt markets, and damages the faith of investors in financial difficulties who need legal certainty before they commit funds to Indian restructurings. Furthermore, it reflects a deeper philosophical tension between territorialism, which considers insolvency as a purely domestic issue and modified universalism, which sees it as a matter of international coordination.

India has long inhabited the former tradition. The IBC Amendment Bill, 2025 that introduces Draft Part Z based on the UNCITRAL Model Law[4], is a clear indicator of India moving forward. However, this switch is not automatic. The real effects of the change will be contingent upon three aspects that no law by itself can fix: a detailed interpretation of the Centre of Main Interests doctrine; a drastic increase in the institutional capacity at the National Company Law Tribunal; and making environmental, social, and governance diligence an integral part of cross-border insolvency planning. The manner in which India will deal with these problems will be the determining factor, whether this change will be a success or just another one, like earlier, that are theoretically nice but practically difficult to grasp.

THE TERRITORIAL ERA OF INDIA’S INSOLVENCY ISOLATION

India’s territorial approach to cross-border insolvency was not accidental; it reflected a legal culture where foreign proceedings were seen very sceptically. Section 44A of the Code of Civil Procedure, 1908, limits the recognition of foreign judgments only to “reciprocating territories” which are designated by the Central Government.[5] Only thirteen countries qualify, Mauritius being the latest in 2015. The United States, Germany, France, and Japan are missing. For a country that markets itself as a leading destination for foreign direct investment, this exclusionary map is really an odd thing.

The consequences have been severe. Sections 234 and 235 of the Insolvency and Bankruptcy Code, 2016, provide for bilateral agreements and letters of request, respectively[6], but neither has been used at a large scale. The most that India has done in terms of real cross-border cooperation is the workaround protocol between the Indian resolution professional and the Dutch trustee in the Jet Airways case, an arrangement resting entirely on goodwill rather than statutory entitlement.[7]

The resulting asymmetry matters a lot from an analytical point of view. Singapore identified India’s Corporate Insolvency Resolution Process as a “foreign main proceeding” in Re Compuage Infocom Ltd.[8] The Supreme Court, while deciding the case of Macquarie Bank Ltd V Shilpi Cable Technologies Ltd, held that foreign financial creditors are permitted to access Indian insolvency proceedings.[9] Indian proceedings have an impact on international scenarios with a lot of force. However, the opposite is not true: foreign moratoriums and asset-freezing orders are still considered unenforceable in India, which is a bummer for international creditors, as they are facing serious costs and at the same time, it hurts India’s image in debt markets worldwide.

III. THE UNCITRAL ADOPTION: A DOCTRINAL SHIFT

The UNCITRAL Model Law on Cross-Border Insolvency, 1997, a result of extensive international consensus, has been enacted by more than sixty countries, including the US, UK, Singapore, and Australia.[10] The Model Law provides procedures for judicial communication, recognition of foreign proceedings, coordination of parallel insolvencies, and assisting foreign representatives. Its main revolutionary feature is the establishment of two separate types of foreign insolvencies: “foreign main proceedings, ” which are held where the debtor’s Centre of Main Interests is located, and “foreign non-main proceedings,” which are given limited relief only.

Draft Part Z of the IBC Amendment Bill 2025 includes provisions that give the Central Government powers to make rules for the cross-border recognition and cooperation, leaving out the Model Law’s text for direct codification.[11] This granting of authority received some well-argued criticisms, one judging the Bill to “give very limited practical guidance, therefore remaining a source of uncertainty in situations involving multinational assets and creditors.”[12]

The criticism is worthy of serious consideration. Delegating to secondary legislation is not inherently wrong; in fact, the United Kingdom’s Cross-Border Insolvency Regulations, 2006,  have taken the exact same route.[13] The danger in the Indian situation is,  however, that the secondary legislation may not come out fast enough, which means that the Centre of Main Interests presumption, conditions for lifting automatic stays, and the methods for coordination of parallel proceedings will remain unresolved. If these matters are not clarified, then the statute’s potential transformative effect will be postponed indefinitely. Nevertheless, the resolution is an indication that India is institutionally embracing modified universalism, a commitment which will become a benchmark against which all future judicial and legislative actions will be evaluated.

CENTRE OF MAIN INTERESTS AND THE SUBSTANCE DOCTRINE

Article 16 of the UNCITRAL Model Law states that the main centre of interests of a corporate debtor is presumed to be its registered office unless proven otherwise, a presumption that Draft Part Z also adopts.[14] The main issue is how the Indian courts will treat the evidence that is sufficient to overturn it.

Most likely, the response will be shaped by a legal pattern that has been evolving over time. Through various Indian court cases and regulatory decisions in the fields of tax law, competition law, and corporate governance, there has been a gradual shift towards the use of substance-over-form analysis. The methods of this approach are determining the real location of the economic activities and decisions rather than the location of the formal setting of the party. For example, in Tiger Global International vs. CIT, the Supreme Court held that tax residency certificates cannot be regarded as conclusive proof for treaty benefits. It used a “head and brain” test to determine where the real management and control are located.[15] The Competition Commission of India has, on similar lines, used this reasoning in the case of merger control enforcement, where it has even gone to the extent of checking whether the entities that claim passive investment exemptions are actually exercising strategic influence over target companies.[16] Recently, the Registrar of Companies has also started to question the authenticity of independent director resignations, essentially checking if formal governance structures reflect substantive reality.

If Indian courts decide to apply the same logic to Centre of Main Interests determinations, a company that is legally registered in Mauritius or the Cayman Islands but virtually controlled from Mumbai will be prevented from using its offshore set-up. This step would bring India into line with the United Kingdom and Singapore, where courts look at the objective factors by which third parties identify a debtor economically.

Some may argue that a strict registered office presumption gives more certainty and safeguards the legitimate offshore structures. This argument points to the fact that, when offshore incorporation corresponds to the actual operational reality, it deserves recognition. At the same time, as the Kutafin Law Review points out, the tension of universalism and territorialism should be resolved by adjusting the degree of the substance inquiry according to the facts of each case.[17] When offshore arrangements are used predominantly as structures for asset protection, a thorough substance inquiry is both good policy and consistent with the Model Law’s spirit.

ENFORCEMENT REALITY AND INDIA’S MATURING APPETITE

India’s enforcement environment is changing rapidly in some ways that even the statutory framework has not yet fully registered. Indian insolvency professionals are becoming much more active in the recovery efforts against overseas private guarantors in complicated cases, getting hold of their assets through very sophisticated family and corporate vehicles. Thus, the National Company Law Tribunal, in Stanbic Bank Ghana Ltd v Rajkumar Impex Pvt Ltd case, has permitted the insolvency of an Indian corporate debtor whose guarantees were for liabilities of the foreign subsidiary.[18] The granting of such cross-border insolvency jurisdiction, which the statutory provisions had very little exposure to, hinted at an institutional confidence which the UNCITRAL adoption is now required to formalise and regulate.

The third-party litigation funding in India, which is not yet fully regulated, is, however, receiving commercial support as a tool for financing cross-border asset recovery.[19] This is a major feature that reflects a similar trend observed in other parts of the world. Funds are very likely to provide support to Indian insolvency professionals in their attempts to trace and recover assets overseas. They view these potential recoveries as a separate and investable asset class, similar to the equity market.

Brazil, a decade ago characterised by increasing enforcement appetite, a debut litigation finance market, and institutional constraints that commentators feared would damage the credibility of its legal system. The forecast, even though it was too pessimistic, changed. Brazilian institutions changed, lawyers got more knowledgeable, and today the country is considered a major forum for international recovery.[20] India is on a path quite similar. Nevertheless, its final point is not fixed by fate. The statutory void to be covered by implementing the Model Law is much larger and the institutional limitations are even more severe. Desire, no matter how sincere, is not going to be enough. It has to go along with the institutional capacity and legislative clarity if India looks forward to be able to realise its enforcement potential.

COMPARISON OF GLOBAL MODELS

Three jurisdictions can serve as a helpful guide to understand India’s future direction, because each one highlights a different aspect of the problem.

Singapore’s case might be the one that is most relevant. In the case of Re Sapura Fabrication Sdn Bhd, the Court of Appeal examined whether a party that held a valid arbitration agreement could refuse an automatic moratorium that comes with recognition of the foreign main proceeding.[21] The Court considered that a discretionary test should be used; the moratorium is not automatically set aside by an arbitration clause, but the court still has authority to lift it where arbitration is genuinely more appropriate. This sophisticated method contradicts the inflexible Privy Council ruling in Sian Participation Corp v Halimeda International Ltd, which used a completely different standard for the same conflict.[22] Indian courts that face similar problems can take great advantage of Singapore’s carefully balanced approach instead of just choosing arbitrations or insolvency moratoriums blindly.

The United Kingdom’s modified universalism is another point of reference. English courts have held repeatedly that even though comity requires the English courts to respect foreign insolvency proceedings, the local priorities, especially the protection of unsecured creditors’ interests, may well justify the English courts in departing from the pari passu principle that is applicable in the foreign jurisdiction.[23] This pragmatic balancing is the intellectual tradition that the Draft Part Z is inviting India to follow. The UK example also shows why it is good to enact the Model Law by way of secondary legislation, so you can update it quickly as the practice changes without having to go through the primary legislative intervention.[24]

The United States serves as the third point of comparison. Chapter 15 of the US Bankruptcy Code has, on several occasions recognized Indian insolvency proceedings as foreign main proceedings, while Indian courts have been unable to reciprocate.[25] That very imbalance is exactly what the IBC Amendment Bill, 2025, is intended to fix. Once passed, Indian courts will have both the power and the intellectual basis to do so.

VII. INSTITUTIONAL CAPACITY AND THE CONSTRAINT REALITY

An excellently crafted statutory framework will still underperform if the institutions that have been assigned to manage it are not capable to do so. The situation of the National Company Law Tribunal, by any standard, is worrying. At the end of March 2025, more than 30,000 cases were pending before the Tribunal and its appellate authority. About 76% of the Corporate Insolvency Resolution Processes in progress had already passed the statutory limit of 270 days, while the creditor recovery rates were only 31.63% in the third quarter of the 2025-2026 financial year.[26] The Parliamentary Standing Committee’s report of December 2025 enumerated institutional delays among “major concerns, ” and the very fact that such a diagnosis was included in an official parliamentary report reflects the political acknowledgement of the magnitude of the problem.[27]

The vulnerability of post-resolution finality only serves to exacerbate these fears. In Kalyani Transco v Bhushan Power and Steel Ltd, the Supreme Court of India first annulled a resolution plan that had been in place for years before eventually overturning its own decision and reinstating the plan.[28] This case is instructive not for its final outcome but because the proceedings reached that point at all. When it comes to cross-border investors who need firm assurance before parting with their money for a distressed acquisition, the risk that a resolution plan which has been closed may be reopened by the judiciary is not only a significant risk but one that is impossible to quantify.

The effect on foreign representatives is very clear; asset preservation orders obtained promptly in Singapore or London will probably be rendered futile if the counterpart Indian proceedings take months to come up for hearing. New judicial appointments, special cross-border benches, and fixed case management schedules are all measures that lie within the government’s authority.[29] Not having such mechanisms may result in the IBC Amendment Bill, 2025, being a wonderful piece of legislation that institutional problems will unfortunately cause to fail in practice.

VIII. ESG AND REGULATORY COMPLIANCE

The link between insolvency and compliance with environmental, social, and governance standards is becoming a main topic. Distressed targets in India are now the norm and they usually have hidden environmental liabilities that continue to exist even after the insolvency process and can be pursued against successors. The Corporate Sustainability Reporting Directive of the European Union is extraterritorial, which means that foreign creditors and acquiring funds may themselves face obligations arising from their exposure to Indian distressed assets.[30] In case a distressed company has made false claims about its environmental practices, regulatory investigations may create complexities or even completely obstruct the insolvency proceedings.

Besides this, the issue of jurisdiction is a moving one as well. The Supreme Court of India in the case of Gloster Limited v Gloster Cables Limited, held that the National Company Law Tribunal has no jurisdiction to resolve disputes related to trademark ownership during the Corporate Insolvency Resolution Process and a separate intellectual property suit is needed for that.[31] Therefore, a fully integrated cross-border strategy has to be formulated, considering all these different aspects together.

CONCLUSION

Cross-border insolvency law is, at its core, a question of trust: whether jurisdictions trust one another enough to coordinate, share information, and give effect to foreign proceedings. For most of its legal history, India’s answer to that question has been cautious at best and exclusionary at worst. The territorial framework that confined recognition to thirteen reciprocating territories was not merely a technical limitation; it reflected a deeper institutional reluctance to cede even modest ground to foreign legal systems.

That hesitation is changing. The meeting of three major things, namely legal reform via the IBC Amendment Bill 2025, the courts becoming more mature through the substance-over-form doctrine, and the commercial sector progressively looking forward to cross-border enforcement, indicate that India is indeed making a transition to modified universalism rather than just giving a sign towards it.

The larger meaning of this change is not limited to India only. As global capital movements are getting more complex and interwoven across different countries, the costs of bringing a single global law of insolvency are not being paid by governments but instead by creditors, investors, and finally the markets themselves. It is a market with India’s level of economic size deciding to engage in cooperative insolvency administration that will have a positive effect on the international system as a whole.

The road ahead carries real obstacles: institutional capacity, interpretive uncertainty, and regulatory complexity will not resolve themselves. But the direction is clear, and the foundations are being laid. India’s transition from territorial outlier to cooperative participant may well prove to be one of the most consequential developments in international commercial law of this decade.

BIBLIOGRAPHY

Cases:-

• AnAn Grp. (Sing.) Pte Ltd. v. VTB Bank, [2020] 1 SLR 1158 (Sing.).
• Gloster Ltd. v. Gloster Cables Ltd., 2026 INSC 81 (India).
• Jet Airways (India) Ltd., Company Appeal (AT) (Ins.) No. 707 of 2019 (N.C.L.A.T.) (India).
• Kalyani Transco v. Bhushan Power & Steel Ltd., 2025 INSC (India).
• Macquarie Bank Ltd. v. Shilpi Cable Techs. Ltd., (2018) 2 SCC 674 (India).
• Re Compuage Infocom Ltd., [2025] SGHC 49 (Sing.).
• Re Sapura Fabrication Sdn. Bhd., [2025] SGCA 13 (Sing.).
• Sian Participation Corp (in liquidation) v. Halimeda Int’l Ltd., [2024] UKPC 16 (U.K.).
• Stanbic Bank Ghana Ltd. v. Rajkumar Impex Pvt. Ltd., (2019) (N.C.L.T.) (India).
• Tiger Global Int’l v. CIT, 2026 INSC (India).
• Uphealth Holdings Inc. v. Dr. Syed Sabahat Azim, (2024) (Calcutta H.C.) (India).

Legislation:-

• The Code of Civil Procedure, 1908, § 44A (India).
• The Companies Act, 2013 (India).
• Commission Directive 2022/2464, of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting, 2022 O.J. (L 322) 15 (EU).
• The Cross-Border Insolvency Regulations, 2006, S.I. 2006/1030 (U.K.).
• The Insolvency and Bankruptcy Code, 2016 (India).
• The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, Draft Part Z (India).
• Insolvency, Restructuring and Dissolution Act 2018 (Sing.).
• 11 U.S.C. §§ 1501–1532 (2018).
• N. Comm’n on Int’l Trade Law, UNCITRAL Model Law on Cross-Border Insolvency, U.N. Doc. A/RES/52/158 (Dec. 15, 1997).

Reports and Institutional Publications:-

• Conyers, India’s Emerging Cross-Border Insolvency Landscape, CONYERS (2026), https://www.conyers.com (full URL to be inserted upon verification).
• King Stubb & Kasiva, Analysis of the IBC Amendment Bill, 2025, KING STUBB & KASIVA (2025), https://ksandk.com/insolvency-and-bankruptcy/analysis-of-the-ibc-amendment-bill-2025/.
• Cross-Border Insolvency: Territorialism, Universalism and Modified Universalism, KUTAFIN L. REV. (year of publication to be inserted upon verification).
• Cross-Border Insolvency in India, LEGAL 500 (2025), https://www.legal500.com (full URL to be inserted upon verification).
• Ministry of Corporate Affairs, IBC Quarterly Data (Q3 FY 2025–26) (India).
• Parliament of India, Standing Committee on Finance, Report on the Insolvency and Bankruptcy Code (Dec. 2025) (India).

[1] Conyers, “India’s Emerging Cross-Border Insolvency Landscape” (Conyers, 2026)

[2] Re Compuage Infocom Ltd, [2025] SGHC 49; Insolvency, Restructuring and Dissolution Act 2018.

[3] Uphealth Holdings Inc. v. Dr. Syed Sabahat Azim, (2024) (Calcutta H.C.) (India); The Code of Civil Procedure, 1908, § 44A (India).

[4] The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (India); U.N. Comm’n on Int’l Trade Law, UNCITRAL Model Law on Cross-Border Insolvency, U.N. Doc. A/RES/52/158 (Dec. 15, 1997).

[5] The Code of Civil Procedure, 1908, § 44A (India).

[6] The Insolvency and Bankruptcy Code, 2016, §§ 234–235 (India).

[7] Jet Airways (India) Ltd., Company Appeal (AT) (Ins.) No. 707 of 2019 (N.C.L.A.T.) (India).

[8] Re Compuage Infocom Ltd, [2025] SGHC 49.

[9] Macquarie Bank Ltd. v. Shilpi Cable Technologies Ltd., (2018) 2 SCC 674 (India).

[10] U.N. Comm’n on Int’l Trade Law, UNCITRAL Model Law on Cross-Border Insolvency, U.N. Doc. A/RES/52/158 (Dec. 15, 1997).

[11] The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (India).

[12] King Stubb & Kasiva, Analysis of the IBC Amendment Bill, 2025, KING STUBB & KASIVA (2025), https://ksandk.com/insolvency-and-bankruptcy/analysis-of-the-ibc-amendment-bill-2025/.

[13] The Cross-Border Insolvency Regulations, 2006, S.I. 2006/1030 (U.K.).

[14] U.N. Comm’n on Int’l Trade Law, UNCITRAL Model Law on Cross-Border Insolvency art. 16, U.N. Doc. A/RES/52/158 (Dec. 15, 1997); The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (India).

[15] Tiger Global International v. CIT, 2026 INSC (India).

[16] Competition Commission of India, Order in Re Goldman Sachs (gun-jumping enforcement proceedings) (India).

[17] Cross-Border Insolvency: Territorialism, Universalism and Modified Universalism, KUTAFIN L. REV.

[18] Stanbic Bank Ghana Ltd. v. Rajkumar Impex Pvt. Ltd., (2019) (N.C.L.T.) (India).

[19] Cross-Border Insolvency in India, LEGAL 500 (2025), https://www.legal500.com

[20] Conyers, India’s Emerging Cross-Border Insolvency Landscape, CONYERS (2026), https://www.conyers.com

[21] Re Sapura Fabrication Sdn Bhd, [2025] SGCA 13.

[22] Sian Participation Corp (in liquidation) v. Halimeda International Ltd., [2024] UKPC 16 (U.K.); cf. AnAn Group (Singapore) Pte Ltd. v. VTB Bank, [2020] 1 SLR 1158.

[23] Cross-Border Insolvency Regulations, 2006, S.I. 2006/1030 (U.K.).

[24] Cross-Border Insolvency Regulations, 2006, S.I. 2006/1030 (U.K.).

[25] 11 U.S.C. §§ 1501–1532 (2018).

[26] Ministry of Corporate Affairs, IBC Quarterly Data (Q3 FY 2025-26) (India).

[27] Parliament of India, Standing Committee on Finance, Report on the Insolvency and Bankruptcy Code (Dec. 2025) (India).

[28] Kalyani Transco v. Bhushan Power and Steel Ltd., 2025 INSC (India).

[29] See The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (India).

[30] Commission Directive 2022/2464, of the European Parliament and of the Council of 14 December 2022 on Corporate Sustainability Reporting, 2022 O.J. (L 322) 15 (EU).

[31] Gloster Limited v. Gloster Cables Limited, 2026 INSC 81 (India).