Group Insolvency under the Insolvency and Bankruptcy Code: Challenges, Judicial Trends and the Road Ahead
- NLR Journal
- Nov 14
- 1 min read
By Shivam Pandey, Teaching & Research Associate, Gujarat National Law University.
Abstract
The Insolvency and Bankruptcy Code, 2016 (IBC) has revolutionised India’s insolvency landscape by consolidating fragmented laws and expediting the corporate resolution process. However, while the Code effectively addresses single-entity insolvencies, it lacks a coherent framework for resolving insolvencies involving interconnected group enterprises. This article explores the conceptual and legal challenges surrounding “group insolvency” within the Indian context. It analyses how the existing statutory framework under the IBC, Companies Act, and accounting standards defines ownership and control within group structures, yet fails to accommodate the complex interdependence of group entities. Drawing from key judicial pronouncements such as State Bank of India v. Videocon Industries Ltd., Edelweiss ARC v. Sachet Infrastructure Pvt. Ltd., and ArcelorMittal India v. Satish Kumar Gupta, the paper examines the evolving judicial trend toward procedural coordination and substantive consolidation. The study also discusses the dilemmas of piercing the corporate veil, cross-border insolvency complications, and the need to balance creditor protection with corporate autonomy. While international models like the UNCITRAL Model Law on Enterprise Group Insolvency provide a guiding framework, India’s implementation requires contextual adaptation. The article concludes that the adoption of a statutory group insolvency mechanism is crucial for ensuring value maximisation, transparency, and consistency in multi-entity resolutions. Strengthening legal definitions, procedural clarity, and institutional coordination will be key to developing an efficient and equitable group insolvency regime in India.
Keywords: Group Insolvency, Insolvency and Bankruptcy Code (IBC), Corporate Veil, Substantive Consolidation, UNCITRAL Model Law.
