India Insolvency Law Faces Test on Foreign Sanctions

Indian insolvency courts are deciding if US-led foreign sanctions, such as OFAC designations, can be used as a valid excuse to halt bankruptcy proceedings. This case tests whether payment restrictions under international law override debt defaults in India, potentially changing how creditors recover dues from multinational-linked companies. What Happened Indian insolvency tribunals are currently addressing…

OFAC sanction, insolvency and Indian tribunals: Can foreign regulatory restrictions defeat IBC proceeding?

The Insolvency and Bankruptcy Code, 2016 (“IBC”) was enacted to address insolvency and facilitate corporate resolution, not to adjudicate complex commercial disputes or operate as a debt recovery tool. However, as Indian companies increasingly operate within global corporate structures, insolvency tribunals are required to grapple with issues that extend far beyond traditional debtor-creditor relationships. One…