.png)
4th RGNUL-SAM CONCLAVE ON EMERGING TRENDS IN INSOLVENCY AND BANKRUPTCY LAWS IN INDIA
SPECIAL ISSUE 2025
NAVIGATING CRYPTO EXCHANGE BANKRUPTCIES: A PRACTICAL GUIDE TO ASSET SEGREGATION AND VALUATION
​
Yash Arjariya and Aishwarya Tiwari
The authors are fourth-year students at Hidayatullah National Law University, Raipur.
​
This paper advances the discourse on cryptocurrency exchange bankruptcies beyond the foundational question of whether crypto assets qualify for bankruptcy proceedings - a matter now settled affirmatively across jurisdictions. The authors offer practical guidance for crypto investors navigating exchange bankruptcies, focusing on asset segregation and recovery strategies. Through analysis of emerging global jurisprudence, the authors identify two competing approaches to establishing trust relationships for asset segregation that are the “segregation test” and the “intention test,” predicting the latter's likely prevalence due to its grounding in common law principles. The paper provides actionable insights for investors in selecting crypto exchanges and managing their investments to maximize asset recovery prospects in bankruptcy scenarios. The authors also address the complex challenge of crypto
asset valuation in bankruptcy proceedings, evaluating the KO model and blockage method while proposing in-specie distribution as a potential solution. This comprehensive analysis fills a critical gap in existing literature by moving beyond theoretical frameworks to provide practical strategies for investor protection and asset recovery in crypto exchange bankruptcies. The findings contribute significantly to the evolving jurisprudence and regulatory framework surrounding cryptocurrency bankruptcies while providing practical
guidance for stakeholders in the crypto ecosystem.
REIMAGINING THE IBC: PRIORITIZING ENVIRONMENTAL
CLAIMS IN INDIA'S CORPORATE INSOLVENCY AND BANKRUPTCY FRAMEWORK
​
Souhardya Roy and Vishal Myneni
The author are third-year students at West Bengal National University of Juridical Sciences, Kolkata.
​
The Insolvency and Bankruptcy Code, 2016 (“IBC”) has an insidious effect on corporate environmental liability. The IBC was created to streamline insolvency resolution for financially distressed companies, and this has led to the claims of a creditor being prioritized over environmental claims, which are classified as contingent claims and receive negligible compensation during insolvency resolution proceedings. This raises concerns about the application of the “polluter pays” principle as propounded by the Supreme Court of India on several occasions. The waterfall mechanism in Section 53 of the IBC prioritises financial creditors' claims over environmental claims, which creates a caveat for corporations to avoid environmental responsibility. This threatens the sanctity of Article 21 rights, which mandates the right to a clean environment. Also, IBC's non-obstante clause in Section 238 has been interpreted to circumvent environmental liabilities. In the present framework, corporate interests supersede public rights. Adopting a "green" approach is necessary to revitalise the IBC. This involves prioritising environmental claims over categories in the waterfall mechanism in favour of public interest. Furthermore, excluding environmental ligitation from the moratorium period is also advisable while enhancing the obligations of the adjudicating
authority and the resolution professional to prioritise environmental claims. All these measures will act as contributing factors to bring about an insolvency framework that is compliant with the environmental, social, and governance framework while adhering to the Equator Principles. Hence, ensuring corporate accountability within a harmonious insolvency framework that mandates the preservation of public interest is a necessity.
PUBLIC INTEREST v. CONTRACTUAL WAIVER DEEP DIVE INTO INTERCREDITOR AGREEMENTS UNDER THE IBC
​
The author is a second-year student at Dr. Ram Manohar Lohia National Law University, Lucknow
​
This paper provides an in-depth analysis of the legal and policy implications of enforcing Intercreditor Agreements (ICAs) under the Insolvency and Bankruptcy Code, 2016 (IBC), focusing on the tension between contractual waivers and statutory rights. ICAs, agreements among creditors to coordinate their actions in cases of debtor default, have become a critical tool in India’s evolving insolvency landscape. However, their enforceability, particularly
regarding the waiver of a creditor’s right to initiate insolvency proceedings under Section 7 of the IBC, raises important legal questions. Section 7 allows financial creditors to file for insolvency against a defaulting debtor, a right grounded in the public interest to maintain financial order and creditor protection. The paper investigates key judicial decisions, including Rakshit Dhirajlal Doshi v. IDBI Bank Ltd. and Amitabh Kumar Jha v. Bank of India, to illustrate the courts' treatment of ICAs and their implications for creditor rights. In Rakshit, the court rejected the Section 7 application, citing obligations under a Security Trustee Agreement, demonstrating that consortium loan agreements can bind creditors to collective action, limiting individual recourse. This reflects a nuanced approach to statutory rights, recognizing the complexity of loan arrangements while balancing contractual freedom with the public interest objectives of the IBC. Additionally, the paper examines the doctrine of waiver in the context of insolvency, considering whether the right to file for bankruptcy can be waived and if such waivers conflict with the IBC’s goals of asset maximization and equitable treatment of creditors. The study highlights concern about protecting the interests of junior creditors, who may lack negotiating power in ICAs and suffer disproportionately high losses during insolvency proceedings. The paper proposes a factor-based approach for assessing ICA enforceability, focusing on considerations such as equitable treatment, the duration of restrictions, and the separation of debtor involvement. By navigating these legal complexities, the study aims to contribute to the broader debate on balancing creditor autonomy with public interest in India’s insolvency regime.
​
SUPPORTING GUARANTEES AND CORPORATE INSOLVENCY: IBBI’S PROPOSED OVERHAUL AND A COMPARATIVE EXPLORATION OF GLOBAL INSOLVENCY PARADIGMS
​
The author is a fourth-year student at Institute of Law, Nirma University.
​​
Imagine a boardroom disarray- executives scrambling as corporate giant teeters on the edge of insolvency. Among the chaos, personal guarantors-often key promoters or third parties-brace for the financial storm about to engulf them. India’s Insolvency and Bankruptcy Code (IBC) has been a transformative force in corporate distress resolution, but its latest chapter addressing the liability of personal guarantors, has introduced a dramatic new twist. Recent rulings, such as the pivotal Lalit Kumar Jain case, coupled with regulatory protocols, have ignited a fierce debate: Should third-party guarantees be mandatorily enforced or should flexibility reign in insolvency proceedings?
This paper ventures into the labyrinth of guarantor liability, tracing its evolution from the Indian Contract Act 1872 to the IBC’s current framework. It juxtaposes India’s legal landscape with global perspectives, from the United States’ flexible Chapter 11 to the UK and Singapore’s approaches to balancing creditor recovery with corporate rehabilitation. As India contemplates amendments mandating the enforcement guarantees, questions loan over the potential for heightened litigation, delays, and unique challenges. From a comparative perspective, strict enforcement can obstruct effective resolutions and undermine the overarching goals of the IBC. Instead, it champions a more adaptable framework that grants creditors greater discussion while protecting guarantors from excessive burdens. By weaving together international lessons and India’s evolving legal context, this paper charts a path toward a balanced, resilient insolvency framework for the future.
DIGITAL DILEMMAS: HOW EMERGING TECHNOLOGIES ARE SHAPING THE FUTURE OF INSOLVENCY AND BANKRUPTCY
​
The author is a fourth student at Jindal Global Law School.
The advent of technological advancements in Artificial Intelligence (AI), Machine Learning (ML), Big Data, and Blockchain are profoundly transforming the legal and regulatory landscapes. This research paper delves into the significant opportunities and challenges that these disruptive technologies introduce into the domains of insolvency, bankruptcy, and restructuring on an international scale. The paper begins by offering a detailed taxonomy of emerging technologies relevant to insolvency, categorizing them into five distinct segments. This taxonomy is technology non-neutral and focuses particularly on the ‘type’ of technologies used. This structured approach serves as a foundation for a comprehensive analysis on how each technology can enhance the efficiency and effectiveness of insolvency practitioners (IPs), resolution professionals (RPs), and adjudicating authorities. Thereafter, the paper proceeds to address the myriad challenges that accompany these technological advancements. These include the risks of automation bias, issues with the translation of laws into rule based codes by programmers and treatment of diverse data as an asset, and the complexities associated with defining, recognising and managing cryptocurrencies as assets within the insolvency estate (or outside it). Each challenge is examined with a view to understand their implications for current insolvency practices and the broader legal framework. In response to these challenges, the paper proposes a set of regulatory strategies designed to effectively govern the integration of emerging technologies within insolvency regimes. Emphasizing a ‘new functionality, new rules’ approach, it argues for the creation of adaptive regulatory frameworks that can evolve in tandem with technological advancements. This approach aims to harness the benefits of innovation while mitigating potential risks. In broader strokes, this paper illuminates the expansive possibilities that modern technologies have to offer for enhancing insolvency practices worldwide. It also urges regulators to adopt a proactive stance in addressing the challenges posed by these technologies, ensuring that the regulatory environment remains robust, flexible, and conducive to positive change. Through its nuanced analysis and forward-looking recommendations, the paper provides a roadmap for navigating the intersection of technology and insolvency in the 21st century.
EVOLVING LIABILITY OF PERSONAL GUARANTORS UNDER THE IBC: BALANCING CREDITOR’S RIGHTS AND GUARANTOR PROTECTIONS AMIDST EMERGING TRENDS
​
Aniruddha Kishore and Akshay Nasi
The authors are second-year students at Institute of Law, Nirma University
​
The Insolvency and Bankruptcy Code (IBC) has been pivotal in streamlining insolvency resolution in India, reducing case timelines, and recovering distressed assets. However, the 2019 Amendment, which brought personal guarantors under the IBC's scope, has introduced new challenges. Recovery rates from personal guarantors remain low, and the Code lacks provisions for asset tracing, leaving creditors exposed to fraudulent transfers of guarantor assets before proceedings. Furthermore, ambiguity around personal guarantor liabilities, especially following their death, has led to inconsistent judicial interpretations, complicating creditor recovery. This study uses a doctrinal approach and identifies critical gaps in the current framework, emphasizing the need for targeted reforms. Despite the IBC’s success in bolstering creditor confidence, personal guarantors face heightened risks, and enforcement remains weak. The paper advocates for establishing specialized tribunals to handle guarantor disputes, introducing robust asset-tracing mechanisms, and clearer liability rules for personal guarantors, including after death. These reforms are essential for creating a balanced and efficient insolvency regime that protects creditors while addressing the vulnerabilities faced by personal guarantors in India’s evolving financial landscape.
GREEN FINANCE: RESTRUCTURING DEBT FOR A SUSTAINABLE FUTURE
​
Ananya Sinha and Purushraj Patnaik
The author are fourth and fifth year students at KIIT School of Law, Bhubaneswar, Odisha respectively
​
Governments across the globe are gearing towards real-time technology to boost economic growth and prosperity by providing consumers and businesses with cheaper and more effective payment options. The development of financial technology, the blistering rate of internet data penetration and cell phones have directly impacted the revolutionary shifts in international payments and transactions. Under the aegis of the National Payment Corporation of India, the Unified Payment Interface was launched as one of the most successful models of real-time payment systems globally. While attributing its success to the collaborative efforts of the Government, central, public-sector banks, private institutions and consumers, India is the undisputed leader in real-time payments. With its latest entry into cross-border remittances, India has progressed from domestic success to a global sensation. This paper intends to comprehensively analyze the progressive acceptance and proliferation of UPI, a form of real-time payment across India against their global counterparts. It shall also discuss the viability of a fee-per-transaction clause on UPI transactions to revitalize the assets of stressed banks and financial institutions, in light of the latest NPCI press release and the future of this ubiquitous model in India.
THE SILENT STAKEHOLDERS: EXAMINING THE CASE OF PUBLIC SHAREHOLDERS IN THE CIRP OF LISTED COMPANIES
​
The author is a fourth-year student at National Law Institute University, Bhopal.
​
In the high-stakes arena of corporate insolvency, shareholders often stand on the periphery, powerless as their investments plummet and decision-making shifts firmly into the hands of creditors. This unsettling reality came into sharp focus during the Electrosteel Steel insolvency resolution, where public equity holders watched as their stakes dwindled and recovery prospects vanished. The Insolvency and Bankruptcy Code (IBC) operated on “creditor-in-control” model, relegating shareholders to the lowest rung in the liquidation hierarchy and excluding them from influential roles such as Committee of Creditors (CoC). This approach, while essential for efficient debt recovery, has left retail and minority shareholders vulnerable to severe financial losses with little to no recourse. In response to this imbalance, the Securities and Exchange Board of India (SEBI) proposed a framework allowing public shareholders to acquire equity in restructured entities under favourable conditions post-resolution. This article critically examines SEBI’s Proposal against the IBC’s creditor-centric framework, questioning if and how shareholder protection can be reconciled with the overarching goals of insolvency resolution. At its core, this exploration delves into the delicate trade-offs between efficient debt resolution and fair treatment of shareholders, assessing the feasibility and implications of granting shareholders a stake in post-resolution entities. By analysing SEBI’s Proposal, this article seeks to spark a broader discussion: Can public shareholder protection be meaningfully integrated into the IBC without destabilizing its fundamental purpose?