Cross-Jurisdictional Approaches To Corporate Group Insolvency: Lessons For The Insolvency And Bankruptcy Code, 2016
Danish Sharma, B.COM LL.B., O.P Jindal Global Law School
I. Introduction
The collapse of a corporate group is rarely a singular event. When a parent falters, subsidiaries tumble; when a subsidiary bears the group's operational debts, the parent's balance sheet is invariably implicated. The corporate group defined for present purposes as two or more legal entities connected through majority shareholding, common control, or contractual subordination has become the inherent structure of modern commerce. In India, conglomerates such as Essar, Jaypee Infratech, IL&FS, and Videocon span dozens, sometimes hundreds, of corporate persons, each constituting a distinct legal entity yet each economically inseparable from the enterprise as a whole.
The IBC, enacted in 2016, was designed to address individual corporate insolvency. Section 6 of the Code permits a financial creditor, operational creditor, or corporate debtor itself to initiate the Corporate Insolvency Resolution Process ("CIRP") against a single "corporate debtor," defined under Section 3(8) as a company or limited liability partnership. The Code said nothing about consolidated proceedings, coordinated resolution plans, or shared moratoriums across related entities.
For nearly a decade, this legislative silence forced tribunals into a series of ad hoc inventions deploying inherent powers, equitable principles such as substantive consolidation, and regulatory authority to fill a gap that grew more consequential with every major group insolvency. That era has now formally ended. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 ("Amendment Act"), which received Presidential assent on 6 April 2026 and was notified as Act No. 6 of 2026, inserts Chapter V-A into Part II of the Code, creating India's first statutory framework for group insolvency.
