In several Commonwealth jurisdictions, the corporate legislation allows creditors to petition a court to order the winding up of a debtor in circumstances where that debtor is unable to pay its debts as they fall due. Such legislation generally presumes that the debtor is insolvent if it has failed to comply with a statutory notice requiring the debtor to pay a certain debt within a given period of time (a statutory demand).

In 2016, the insolvency and bankruptcy landscape in India was radically overhauled by the introduction of the new Insolvency and Bankruptcy Code (IBC). In addition to consolidating the complex set of existing laws and regulations on insolvency and bankruptcy into a single law, the IBC introduced time bound and creditor driven resolution process for distressed companies overseen by the newly formed National Company Law Tribunal (NCLT).

The Indian Insolvency and Bankruptcy Code, 2016 (the IBC) represents a radical rewriting of India’s corporate insolvency procedures, enabling creditors to restructure bad debts and rehabilitate corporate debtors within specified timelines.

The giants of Asia – Indonesia, China, and India – raise many opportunities and challenges for insolvency practitioners. Baker McKenzie’s own Andi Kadir spoke this morning about some of the solutions to those problems, showcasing his significant experience with insolvency reforms and opportunities in Indonesia.

Andi highlighted the benefits of the Penundaan Kewajiban Pembayaran Utang regime as a restructuring tool in Indonesia. A PKPU is a debtor in possession mechanism, somewhat like a blend of a US Chapter 11 administration with aspects of the insolvency laws of the Netherlands.

For several years, India has had various overlapping laws and adjudicating authorities for dealing with financial distress and insolvency, which has often resulted in multiple proceedings being initiated before different forums in situations of distress. This in turn has resulted in ineffective and delayed recovery or restructuring and placed excessive strain on lenders.

On 20 June 2018, the Indian Government released a suggested draft chapter on cross-border insolvency to be included into the Insolvency & Bankruptcy Code, 2016 (Code). This addresses a missing link in the ambitious reforms of the Indian insolvency framework and is to be welcomed.

It is timely, with further reform of the new Indian Bankruptcy Code (IBC) in prospect, to outline our thoughts on some of the current issues on which various market participants have requested an understanding of the approach and learnings of overseas practitioners.

The Indian Insolvency and Bankruptcy Code 2016 (Code) introduces a completely new insolvency and resolution regime for India. Key provisions of the Code and related regulations came into effect this month, the latest of them being the provisions relating to the liquidation of corporates and related regulations which came into effect on 15th December. The provisions of the Code that are now in effect introduce a new corporate insolvency resolution process and liquidation process, along with corresponding rules and regulations.

Introduction

The Insolvency and Bankruptcy Code, 2016 (Code) has just been passed by both Houses of the Indian Parliament. The key objectives of the Indian government in driving this legislation forward were to improve India‘s poor ranking on the ease of doing business index created by the World Bank Group and to stimulate the growth of the Indian capital markets, and the stated intention of the Code is to replace the relevant insolvency, restructuring and winding up provisions which are spread over a number of Indian statutes.

Our role

Proposed Swiss International Insolvency Law Reforms

In October 2015, the Swiss Federal Department of Justice and Police (Eidgenössisches Justiz- und Polizeidepartement) published a preliminary draft of reforms to title 11 of the Swiss Private International Law Act (“SPILA”), which governs insolvency proceedings and compensation proceedings (Articles 166–175 rev-SPILA), together with an explanatory report. The consultation procedure for the proposed reforms culminated on February 5, 2016.