The IBC addresses the first issue as foreign creditors are permitted to participate in Indian insolvency proceedings. The other two issues, however, remain unresolved by the existing legislation. Both these issues are likely to play out in the Jet Airways case.
With regard to foreign assets, the IBC technically allows the resolution professional access to all of Jet Airways’ assets for the benefit of creditors in the Indian proceeding. However, this may be difficult in practice. Certain assets of the beleaguered airline have been seized by the Netherlands court and accessing them may be a challenge without a level of co-operation from the Dutch authorities. The NCLAT, in allowing the Dutch administrator to be heard, was probably aware of this fact as it required an undertaking that the Dutch administrator would cooperate in the Indian proceedings and not transfer any of Jet Airways’ offshore assets in its possession.
The issue of parallel insolvency proceedings in different jurisdictions are also at play here. If the Netherlands proceedings were to continue without any coordination with the IBC proceedings, this could create much confusion on the effect of the order of the Netherlands court on the assets of Jet Airways and the rights of its creditors. The NCLAT has recognised the need for cooperation and coordination, though it appears undecided on the form such cooperation is to take. Nevertheless, it has mandated cooperation between the resolution professional and the Dutch administrator and has asked SBI, as the lead financial creditor, to suggest a procedure to ensure there are no conflicts in addressing the interests of stakeholders of both countries. In the absence of a cross-border resolution framework, these appear steps in the right direction.
The Jet Airways case brings to light the urgent need to address the lacuna in the IBC on cross-border insolvency. The Insolvency Law Committee, in its October 2018 report, recommended the adoption of the UNCITRAL Model Law of Cross Border Insolvency with certain modifications. The Model Law itself has certain limitations, such as its failure to address the insolvencies of group companies (an issue that is currently being considered by another committee), and adopting it will not provide a solution for each issue that comes up in insolvencies that cross domestic borders. However, it would at least provide an enabling framework for the NCLT or the NCLAT to cooperate with adjudicatory authorities and resolution professionals in other jurisdictions to achieve an optimal outcome that protects the interest of all stakeholders. In the meantime, the adjudicating authorities and other stakeholders in the Jet Airways proceedings will need to come up with creative solutions to ensure that cross-border complications don’t come in the way of an efficient and timely resolution.
Ravi is a partner, and Udupa an associate, at Samvad Partners. The views are personal