The government is likely to opt for a global template to fast-track the implementation of cross-border insolvency regime rather than negotiate separate bilateral arrangements with individual countries, official sources said.

The template – UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) – is already used by major economies like the US, UK, Australia, and Singapore in framing their cross-border insolvency laws, according to a report by FE.

The model law would make it easier to coordinate with foreign courts and give insolvency professionals a more predictable process for handling cases involving overseas assets and creditors.

Officials said that adopting a global model would help the government avoid the time and complexity involved in negotiating separate insolvency treaties with every country where domestic companies are present. “This approach could enable the government roll out the long-awaited cross-border insolvency faster without having to wait for separate reciprocal agreements with individual countries,” the official said.

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 was partially brought into force in May, but the cross-border insolvency provisions are yet to take effect. That’s because the relevant rules and foreign jurisdictions to which the new regime will apply are yet to be notified.

The move towards adopting MLCBI has been enabled by the newly-inserted Section 240C into the IBC through the 2026 amendments. This section gives central government the power to lay down rules for recognising foreign insolvency proceedings and coordinating with courts in notified countries.

Opting for a global model law would also mark a shift from the route envisaged under Sections 234 and 235 of the IBC. These provisions, operationalised in 2017, allow for reciprocal arrangements with foreign countries. However, no bilateral agreement under Section 234 has been signed so far.

According to an official, the absence of specific rules governing cross-border insolvency can lead to value erosion and competing claims by creditors.

“The UNCITRAL model needs to be tailored to meet the domestic legal and financial requirements. The government recognises that delays in recognising insolvency proceedings or securing assets across jurisdictions can adversely affect creditors that have extended loans to companies with a global presence,” the official said.

Experts said that the UNCITRAL model law provides a tested architecture for recognition, relief and judicial cooperation without requiring countries to completely harmonise their substantive insolvency laws. “A global template could provide greater predictability while allowing India to tailor implementation to domestic requirements,” said Srinivasa Rao, partner and leader (risk advisory services) at Nangia Global.