When One Is Not For All

It's time for India to look at a group insolvency framework under the Insolvency and Bankruptcy Code (IBC)—one that would allow entire corporate groups to undergo a unified resolution process.

- Debarshi Chakraborty

On the face of it, the logic is hard to fault. The current company-to-company approach often erodes value, prolongs timelines, and frustrates recovery. A consolidated process, in contrast, promises efficiencies, synergies, and better outcomes.

What lends credence to the possibility of a framework for group insolvency is that, just a few months ago, the Insolvency and Bankruptcy Board of India (IBBI) floated a discussion paper acknowledging the issue and sketching out a possible solution. Notably, it did not recommend amending the IBC itself. Instead, the IBBI suggested this structural shift be introduced by tweaking the Corporate Insolvency Resolution Process (CIRP) regulations. Among the proposed changes are joint hearings, appointment of a common resolution professional, information-sharing protocols, and synchronized timelines.

Sensible as these fixes may seem, they raise a foundational legal question: can delegated legislation be used to recast one of corporate law's oldest tenets—that each company, no matter how intertwined with others, stands as a separate legal entity?

The principle of separateness is no minor technicality. It lies at the heart of company law. The landmark 1896 ruling by the British House of Lords, in