By Ashish Aggarwal and Ravina

In recent years, there has been an increasing focus on the need for regulation on group insolvency. In the Insolvency and Bankruptcy Code, 2016 (IBC) there is no mention of group insolvency, however, there are certain judgments of the Hon’ble National Company Law Appellate Tribunal, which have dealt with the concept of group insolvency and in certain companies, more particularly real estate companies, the group insolvency concept has been implemented.

Insolvency and Bankruptcy Board of India (IBBI) has issued several reports on the subject and the Cross Border Insolvency Rules/Regulations Committee has recently released its second report on group insolvency. The report provides a detailed analysis of the challenges involved in managing group insolvency cases and offers recommendations on how to improve the regulatory framework and policies for dealing with such situations.


Group insolvency refers to the situation where a group of companies, often with interconnected and interdependent ownership or operations, faces financial difficulties, and may potentially go bankrupt. This situation can have a significant impact on the overall stability of the financial system, especially if the group is large or has extensive cross-border operations. Group insolvency allows for a coordinated and unified approach in dealing with the financial distress of the group as a whole, rather than handling each company’s insolvency individually. The IBC does not provide for a consolidated mechanism for initiation of insolvency proceedings of the corporate debtors within the same group therefore the Insolvency and Bankruptcy Board of India (IBBI) constituted a Working Group (WG) on group insolvency under the chairmanship of Shri U.K. Sinha with a mandate to recommend a regulatory framework to facilitate insolvency resolution and liquidation of corporate debtors in a corporate group.

Key Findings and Recommendations in the Report of the Working Group on Group Insolvency[i]:

The WG submitted its recommendations on 23rd September, 2019. The report highlighted the need for a comprehensive framework for group insolvency which includes the mechanisms for identifying and resolving the interconnectedness and interdependencies among companies of a group. The report further highlighted that the cross-border complexities can be addressed by co-operation and coordination among the stakeholders. The report further highlighted the need to protect the interests of stakeholders, including creditors, employees, and suppliers, in group insolvency cases. The above report recommends for filing a single application to commence CIRP for multiple group companies that have committed defaults wherein a single Adjudicating Authority is required to adjudicate the insolvency proceedings of different companies of a group.

The Ministry of Corporate Affairs (MCA) then constituted the Cross-Border Insolvency Rules/Regulation Committee (CBIRC) to make recommendations on Cross Border Insolvency. The CBIRC submitted its First Report on the rules and regulatory framework for cross border insolvency on 15th June, 2020. On 21st February, 2020 the CBIRC’s mandate was expanded to advance the work of the Working Group and to include analysis of the UNCITRAL Model Law on Enterprise Group Insolvency (MLEGI) and for formulation of recommendations for the resolution of group companies for IBC.

On 18th January, 2023, the MCA had placed the second report of the CBIRC on enterprise group insolvency based upon UNCITRAL Model Law for enterprise group insolvency.

Gist of the Second Report[ii]: Proposed framework and recommendations

The report observed that group insolvency cases have become increasingly common in recent years, with a growing number of large multinational companies facing financial difficulties. These cases can be particularly challenging to be managed due to the complex ownership and operational structures of the companies, as well as the cross-border nature of these companies. The report recommends that the IBC should permit filing of joint applications[iii] on behalf of multiple corporate debtors belonging to the same group that have committed any default.

The report suggests that a broad and inclusive definition of ‘group’[iv] should be provided in the IBC Code so as to include a large number of corporate debtors including the companies and LLPs within the ambit of the group insolvency framework and the definition may be based on the criteria of control and significant ownership. The report further says that the group insolvency framework shall not apply to solvent members of the group, it should only apply to corporate debtors against whom a CIRP or liquidation proceedings are ongoing.

The report also highlights the need for improved communication[v] and coordination between the different stakeholders involved in group insolvency cases, including regulators, creditors, and shareholders. The lack of effective communication and coordination can increase the difficulties involved in managing group insolvency cases and can lead to significant delays and losses for all involved companies.

The report recommends several measures to improve the regulatory framework and policies for dealing with group insolvency cases. These include the establishment of a clear legal framework[vi] for cross-border group insolvency, the development of guidelines and standards for managing such cases, and the creation of a cross-border insolvency court to oversee these cases.

The Committee further suggests that the MLEGI may not be adopted in India[vii] at present as the provisions of the MLEGI mainly deal with cross-border issues that may arise in the insolvency of multinational enterprise groups.

The MLEGI was built on the recommendations contained in the UNCITRAL Legislative Guide and was adopted by UNCITRAL in 2019. It is a flexible instrument that may be adopted by countries with modifications as per their requirement, to make it suitable to their domestic jurisdiction’s context. At present, the MLEGI has been adopted in 53 States including United States of America, United Arab Emirates, South Africa, Japan, Jordan, UK etc.

The committee further recommends that the UNCITRAL Legislative Guide concentrates on domestic group insolvency whereas the focus of the MLEGI is mainly on resolving the insolvency of multinational enterprise groups. Since the provisions of the MLEGI chiefly deal with cross-border issues. Therefore, the report recommends that adoption of the MLEGI may be considered after enactment of single entity cross border insolvency laws and based on learnings from its implementation. Instead, the Committee recommends that for domestic group insolvency, a voluntary and flexible framework should be provided in the Code which may be introduced in phases. In the first phase, provisions governing domestic group insolvency only may be enacted and the Provisions on cross border group insolvency may be enacted in the second phase.

The report also emphasizes the need for greater transparency and information sharing[viii] and importance of communication and coordination between stakeholders in managing group insolvency cases, as well as the importance of early detection and management of potential group insolvency cases.

The report has important implications, especially for multinational companies and their stakeholders. It highlights the need for effective risk management and regulatory frameworks to deal with the growing risk of group insolvency.

Proposed changes to the IBC Code, 2016:

The group insolvency under the IBC is a relatively new concept in India, and there are still challenges and complexities in its implementation. In view of the same, The MCA has recently released an invitation for the public comments on the proposed changes in the existing IBC[ix]. The proposed draft addresses cross-border insolvency which refers to insolvency proceedings involving entities with assets or operations in different jurisdictions. On the basis of the report of the CBIRC-II, the proposed changes in IBC provides that issues such as cross-border insolvency, treatment of intra-group transactions, and coordination among different stakeholders within the group can be addressed by streamlining the process of group insolvency in India and as such it proposes the adoption of the UNCITRAL Model Law on Cross-Border Insolvency, which provides a framework for cooperation and coordination among different jurisdictions in cross-border insolvency cases. This provision aims to facilitate international cooperation and improve the effectiveness of cross-border insolvency proceedings.


In conclusion, there have been several reports and studies on group insolvency in India, recognizing the challenges and implications of this complex issue. These reports emphasizes the need for a comprehensive legal framework, enhanced transparency and disclosure requirements, and good corporate governance practices to effectively address group insolvency risks and to protect the interests of stakeholders.

The recent second report of CBIRC provides some valuable insights into the challenges involved in managing these cases and offers recommendations on how to improve the regulatory framework and policies for dealing with them. Overall, the report is an important development in the efforts to improve the regulatory framework and policies for managing group insolvency cases, therefore, the MCA has placed reliance to include the major recommendations of the report vide amendments in the IBC.

There is urgent need of regulations pertaining to group insolvency and amendment of IBC to incorporate the group insolvency concept in order to expedite Corporate Insolvency Resolution Process (CIRP) and reduce the overall time for resolution of the debt and reduce multiplicity of proceedings.

[i] Report of The Working Group on Group Insolvency, September 2019, available at

[ii] Report of CBIRC-II on Group Insolvency, December, January 2023, available at <>

[iii] Id. p. 33-34

[iv] Supra note 2, p. 25-27

[v] Supra note 2, p. 43-44

[vi] Supra note 2, p. 18

[vii] Supra note 2, p. 15-18

[viii] Supra note 2, p. 31, 42-44

[ix] Notice, “Invitation of comments from the public on changes being considered to the Insolvency and Bankruptcy Code, 2016”, January 2023, available at