India

Saga Legal, a multi-service law firm, with offices in New Delhi, Mumbai and Bengaluru, has announced the joining of Nishtha Kumar as a Partner in its Litigation and Dispute Resolution practice. She will be based in the firm’s New Delhi office. Nishtha will lead Saga Legal’s regulatory disputes practice, with a primary focus on electricity and aviation matters, and will also contribute significantly to the firm’s commercial litigation and arbitration work. Nishtha’s professional journey spans leading law firms such as J. Sagar Associates, Trilegal, and SKV Law Offices, as well as her independent practice under NK Law. She has advised and represented a wide range of clients, including electricity sector conglomerates and airline companies, in complex disputes before the Supreme Court of India, various High Courts, arbitral tribunals, and sectoral regulators. Her experience includes handling high-value and sensitive matters relating to tariff disputes, changes in law and force majeure claims, along with a broad spectrum of corporate and commercial disputes. Commenting on the appointment, Gaurav Nair, Managing Partner, Saga Legal, said: “Delhi continues to be the nerve centre for litigation and regulatory work in the country. We are consciously focused on expanding our bandwidth here to respond to the growing volume and increasing diversity of client requirements. Nishtha brings strong regulatory and courtroom experience, and her presence will add depth to our disputes practice in Delhi.” Speaking on her joining, Nishtha Kumar said: “Saga Legal has built a strong reputation in the disputes and regulatory space, and there is a real opportunity to build on that foundation. I am looking forward to working with the team to strengthen the firm’s presence in regulatory and commercial disputes and to contribute meaningfully to its growing practice.” About Saga Legal Founded in 2016, Saga Legal is a multi-service law firm providing a wide range of legal services across diverse practice areas. The firm advises clients on matters ranging from dispute resolution to corporate advisory, offering integrated legal solutions under one roof. The firm offers a comprehensive suite of legal services across a broad spectrum of commercial and regulatory matters. The firm’s core areas of specialisation encompass corporate structuring and restructuring, banking and finance, insolvency and bankruptcy, mergers and acquisitions, intellectual property, labour and employment, real estate, trust laws, tax advisory and planning, foreign exchange and foreign contribution regulations, securities law, and white-collar crime.

I. Introduction The increasing cross-border participation of Indian companies in international commerce has led to a corresponding rise in participation of Indian companies in foreign-seated arbitrations for resolution of disputes between the parties. In many instances, foreign lenders have attempted to enforce foreign arbitral awards in India against the Indian entities. However, when such Indian entities enter insolvency proceedings, the interplay between the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and the Insolvency and Bankruptcy Code, 2016 (“Code”) becomes contentious. The principal question, which stems from such interplay is: [a] whether there is a prohibition on continuation of foreign-seated arbitral proceedings upon issuance of a ‘moratorium’ under Section 14 of the Code against the Indian entity undergoing corporate insolvency resolution process (“CIRP”); and [b] whether a foreign award under Sections 44 of the Arbitration Act can be treated by the resolution professional (“RP”) as a “claim” of the foreign lender in the ongoing CIRP of the Indian entity. This article examines the treatment of foreign-seated arbitration proceedings and foreign arbitral awards against Indian companies undergoing insolvency. Part II of the article analyses the impact of the moratorium under Section 14 of the Code on the continuation of such proceedings. And Part III discusses the requirement of judicial recognition for enforceability of foreign awards, the restrictions imposed by the moratorium on enforcement of foreign awards and the treatment of unenforced foreign awards as “claims” under the Code. Further, Part IV presents concluding thoughts on the issues set out above. II. Impact of Moratorium on Continuation of Foreign Seated Arbitration Proceedings The territorial scope of the Code is defined under Section 1(2), which provides that the Code extends to the whole of India. This establishes the general principle that the Code, including its moratorium provision under Section 14, operates within India’s territorial boundaries. However, Section 234 of the Code carves out a limited exception to this rule by empowering the Central Government to enter into reciprocal agreements with foreign states to facilitate the application and enforcement of the Code’s provisions across jurisdictions. This Section provides that the Government may notify a list of countries with whom a reciprocal arrangement has been made regarding application of the Code in those countries, and in turn application of such countries’ insolvency laws in India. The process stipulated under the Code is akin to the list of notified countries under the New York Convention, 1958 in terms of the Arbitration Act for the purposes of enforcement of foreign awards in India.[1] A harmonious reading of Section 1(2) with Section 234 of the Code implies that the moratorium’s applicability under Section 14, to foreign-seated arbitration proceedings, is contingent upon the existence of such a reciprocal arrangement between India and the foreign state concerned. In the absence of a reciprocal agreement, Section 14 cannot automatically apply to prohibit the continuation of foreign-seated arbitrations. This limitation restricts the moratorium’s operation to domestically seated arbitrations,[2] and renders the Code ineffective in halting arbitral proceedings or enforcement actions abroad. As a result, arbitral tribunals seated outside India are not bound to recognise or give effect to the Indian moratorium, and may continue proceedings or enforce awards against the corporate debtor’s foreign assets. It is important to note that, as of date, India has not entered into any reciprocal agreements under Section 234. This legislative inaction has created a practical void wherein Section 14 remains inapplicable to foreign-seated arbitrations that lack a connection to Indian law or assets. Consequently, assets of corporate debtors involved in foreign arbitral proceedings outside India are left without effective protection during the CIRP, exposing it to potential enforcement.[3] This lacuna undermines the very purpose of Section 14, which is to preserve the corporate debtor’s assets and maintain the status quo during the resolution process.[4] The absence of cross-border applicability of the moratorium under Section 14 of the Code frustrates this objective by allowing foreign arbitral proceedings to proceed unchecked, thereby eroding the corporate debtor’s global asset base and disturbing the parity among creditors. III. Treatment of an Unenforced Foreign Award as “Claim” under The Code Legal Status of a Foreign-Seated Award Under Indian law, a foreign award is not ingrained with self-enforcing authority. A clear distinction exists between a foreign award per se and an award that has been judicially recognised and deemed enforceable. The Supreme Court of India, in Government of India v. Vedanta Ltd.[5] has clarified that a foreign award “is not a decree by itself” and does not become a “foreign decree” at any stage of the proceedings. Its legal efficacy within India is entirely contingent upon its enforcement in accordance with the Part II of the Arbitration Act,[6] which is a two-stage process. The first and most crucial stage is that of “recognition”, wherein the award holder is required to file an application under Section 47 of the Arbitration Act before a competent High Court. The court does not undertake a review on the merits but performs a limited supervisory role, examining whether any of the exhaustive grounds for refusal of enforcement, as enumerated in Section 48, are met. Once the Court is satisfied that the foreign award is enforceable, the second stage gets triggered under Section 49 of the Arbitration Act, where the award “shall be deemed to be a decree of that Court”. As per the ruling of the Bombay High Court in Jindal Drugs Ltd. v Noy Vallesina Engineering Spa,[7] a foreign award yet to be found enforceable under the Arbitration Act “cannot be relied on for any purpose in India” and is not considered binding on the parties. Therefore, judicial recognition is a non-negotiable condition precedent for an award to have any coercive legal effect in the country. Despite the above judgments, in Agrocorp International Private (PTE) Limited v. National Steel and Agro Industries Limited,[8] CIRP was initiated against the corporate debtor on the basis that the unrecognised foreign award was pronounced in a country which is reciprocating territory within meaning of Section 44-A of Civil Procedure Code, 1908 (CPC) and thereby capable of execution in India. This judgment of the NCLT Mumbai, while on the face of it is favourable to foreign creditors, its legal reasoning has been criticized, for conflating a foreign ‘award’ with a foreign ‘decree’ by relying on Section 44-A of the CPC. The enforcement of foreign awards is governed independently by Part II of the Arbitration Act and not by the provisions of the CPC. Further, even if it assumed that a foreign award is a “deemed decree” if issued by a reciprocating territory, such award is not automatically enforceable in India unless it fulfils the substantive requirements prescribed under Section 13 of the CPC.[9] Finally, Agrocorp is clearly contrary to the ruling in Vedanta and Jinal Drugs Ltd. The correct view, according to us, was taken by the NCLT, Cuttack Bench, in Jaldhi Overseas Pte. Ltd. v. Steer Overseas Pvt. Ltd.[10], which relying on Vedanta, held that a foreign award is not by itself sufficient to initiate CIRP under Section 9 of the Code, pending recognition and enforcement of the award under the Arbitration Act. Effect of Moratorium on Enforcement of Foreign Award Upon the initiation of CIRP, the moratorium declared under Section 14 of the Code bars “the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order...”. This creates a challenging scenario for an award holder whose award was not recognised by Indian courts prior to the commencement of CIRP. Upon issuance of the moratorium against the Indian corporate debtor, any and all proceedings, including enforcement proceedings of foreign arbitral awards before Indian courts, must be stayed till completion of the moratorium period. Also, once the CIRP is completed, assuming successfully, the ‘clean slate principle’ of the Code would render the award meaningless, therefore, leaving the award holder with no other option but to file its claim with the RP. Admission of Claim under the Code Basis Foreign Award The admissibility of a foreign award as a “claim” under the Code depends on the distinction between a mere claim and an enforceable claim. Section 3(6) of the Code defines a “claim” broadly as a “right to payment, whether or not such right is reduced to judgment, fixed, disputed, or undisputed”. An unrecognised foreign award may, on case-to-case basis, qualify as a claim within this definition. The NCLT Kolkata bench in Yes Bank Ltd. v. Sarga Hotels (P) Ltd.[11] (relying on the judgement of the Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta[12]) held that a claim can be admitted by the RP as contingent claim, wherein the claim amount under unenforced foreign award can be held in escrow by the RP, which then can be released on enforcement of the foreign award by the relevant Indian court. Thus, while an unrecognised foreign award may constitute a “claim” under the Code, it lacks the enforceability and can only be admitted as contingent claim, subject to recognition and enforcement under Part II of the Arbitration Act. This approach ensures procedural fairness by preserving the claimant’s right to eventual recovery while preventing premature depletion of the corporate debtor’s estate. Alternative Remedy Available to Foreign Creditors or Award Holder of a Foreign Award In the event a foreign award remains unenforced under Part II of the Arbitration Act, the foreign creditor / award holder may still seek recourse under the provisions of the Code. An unenforced foreign arbitral award can be submitted as a proof of claim in the CIRP of the corporate debtor rather than the award forming the actual basis of the claim. Upon commencement of CIRP and issuance of moratorium by the NCLT, the Interim Resolution Professional (“IRP”) issues a public announcement under Section 15 of the Code, inviting creditors to submit their claims within a specified time period. The foreign creditor / award holder can submit, with the IRP (later the RP), the prescribed form along with the necessary documents supporting/evidencing its claims, which documents qualify as proof of claim. As part of the supporting documents the foreign creditor / award holder may also provide the foreign award. Therefore, while the unenforced foreign award supports the claim submit, the same does not form the basis of the claim. Accordingly, a foreign creditor / award holder is not required to rely solely on an arbitral award and can submit supporting / underlying documents as proof of claim,[13] ensuring the admission of its claim despite the award not being enforced. This route may be equally applicable in cases where insolvency proceedings are sought to be initiated under Section 7 or 9 of the Code. However, this may not be a blanket solution in each case and the viability of the same will depend on the facts of each case. IV. Analysis and Conclusion The intersection of foreign-seated arbitration and the moratorium provisions for insolvency under the Code exposes a significant structural gap in India’s cross-border insolvency regime. While Section 14 aims to preserve the corporate debtor’s assets, its territorial limitation under Section 1(2) and the absence of reciprocal arrangements under Section 234 prevent its effective application to foreign proceedings. As a result, tribunals seated in foreign territory may continue arbitration or enforcement against offshore assets, undermining the collective insolvency framework. The moratorium’s inability to extend beyond India’s borders allows differential treatment between domestic and foreign creditors, weakening the principle of creditor equality. Further, unresolved questions persist on the treatment of foreign awards. Judicial recognition remains a prerequisite for enforceability under Part II of the Arbitration Act, but the moratorium halts even such recognition proceedings during CIRP. This forces resolution professionals to treat unrecognised awards as contingent claims creating uncertainty for creditors and other participants alike. Alternatively, award holders of an unrecognized foreign award might also choose to file their claim in the CIRP of the corporate debtor with supporting documents. Such claims might be accepted basis the procedure provided under the Code as elaborated in the article above. To ensure coherence, India must operationalise Section 234 through reciprocal treaties and clarify statutory provisions governing the status of foreign awards and proceedings during insolvency. Authors: Ayush Agarwala, Partner – Bombay Law Chambers Aviva Jogani, Attorney – Bombay Law Chambers Special thanks to Durgeshwari Paliwal for her support in authoring this article. Disclaimer: The article is intended solely for general informational purposes only and does not constitute legal advice. It should not be acted upon without seeking specific professional counsel. No attorney-client relationship is created by reading this article. [1] IBA Toolkit on Insolvency and Arbitration, Questionnaire – National Report of India, Para 88 and 89, Page 23. [2] Alchemist Asset Reconstruction Company Ltd. v. Hotel Gaudavan Pvt. Ltd. (2018) 16 SCC 94, Para 4; K.S. Oils Ltd. v. State Trade Corporation of India Ltd. 2018 SCC OnLine NCLAT 352, Para 14-15. [3] IBA Toolkit on Insolvency and Arbitration, Questionnaire – Report of India, Para 29, Page 8. [4] Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd. 2017 SCC OnLine Del 12189, Para(s) 10, 14-15. [5] Government of India v. Vedanta Ltd. Civil Appeal No. 3185 Of 2020, Page 38. [6] Kalyani Transco v. Bhushan Power & Steel, 2025 SCC OnLine SC 2093, Para 176. [7] Noy Vallesina Engg. SpA v. Jindal Drugs Ltd., (2021) 1 SCC 382, Paras 8-11. [8] Agrocorp International Private (PTE) Limited v. National Steel and Agro Industries Limited, CP (IB) No. 798/ MB/ C-IV/ 2019, Para 36. [9] Usha Holdings LLC v. Francorp Advisors, (2019) 5 Comp Cas-OL 159, Para 26. [10] Jaldhi Overseas Pte. Ltd. v. Steer Overseas Pvt. Ltd, P No. L8/CTB/2019., Para(s) 10,12. [11] Yes Bank Ltd. v. Sarga Hotels (P) Ltd., 2023 SCC OnLine NCLT 1051, Para 41. [12] Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, Para 155. [13] Anand A Kulkarni v Rajkumar Das & Ors., C.P. No. (IB) 965/MB/C-III/2022, Para 11.

By: Akil Hirani and Rahul Datta, Majmudar & Partners, India Introduction On December 21, 2025, the Indian government published the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 (the “Amendment Act”) in the official gazette for general information.  The Amendment Act, once notified, will introduce important changes to three (3) key insurance statutes in India, namely, the Insurance Act, 1938 (the “Insurance Act”), the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.  Subsequently, on December 30, 2025, the Indian government notified the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2025 (the “Amendment Rules”) to amend the norms applicable to foreign investment in Indian insurance companies. This update discusses the key changes introduced through the Amendment Act and the Amendment Rules and analyses their ramifications. Key amendments Increase in the foreign investment limit: By virtue of an amendment to Section 2(7A) and the introduction of Section 3AA of the Insurance Act, the Amendment Act will increase the foreign investment limit in the Indian insurance sector from 74% to 100%, albeit with conditions that will be prescribed by the Indian government in due course. Given the importance of the insurance sector to the Indian economy, the large capital requirements, the longer gestation period for investments, and the under penetration of insurance in India, it had become imperative to attract more foreign investment from global insurance companies that understand the sector better.  Permitting 100% foreign ownership will do away with the need to have an Indian partner and will provide more certainty to foreign insurance companies on ownership and control of their Indian operations.  In addition to an increase in insurance penetration and density, the inflow of additional capital in the sector and the possibility of new entrants seeking licenses is likely to encourage innovation and competition in the sector. Amendment to foreign investment norms: The Amendment Rules make corresponding changes to the Indian Insurance Companies (Foreign Investment) Rules, 2015, to enable the liberalization of the insurance sector. In addition, the Amendment Rules also liberalize the governance and operational requirements applicable to Indian insurance companies having foreign investment.  Previously, an Indian insurance company with foreign investment had to ensure that a majority of its directors and a majority of its key management persons were resident Indian citizens.  The Amendment Rules remove this requirement.  However, the requirement to ensure that at least one among the Chief Executive Officer, Managing Director or Chairperson of the board is a resident Indian citizen continues to apply.  Further, Indian insurance companies having foreign investment in excess of 49% were subject to additional requirements in relation to dividend payouts, maintenance of general reserves and appointment of independent directors.  These requirements have also now been removed.  Similarly, for insurance intermediaries having foreign investment, the restrictions on repatriation of dividends, payments to group entities, and requirements relating to board composition have also been done away with. Allowing foreign investors to not only acquire up to 100% equity in Indian insurance companies but also retain significant flexibility in governance and operational matters is a step in the right direction that is likely to make the sector more attractive. Relaxation in approval requirement for transfer of shares: The Insurance Act currently requires an Indian insurance company to obtain prior approval of the Insurance Regulatory and Development Authority of India (the “IRDAI”) for any transfer of its shares where: (a) after the transfer, the total shareholding of the transferee is likely to exceed 5% of the insurance company’s paid-up equity capital; and (b) the nominal value of the shares intended to be transferred by a transferee (including by a group of persons under the same management) will exceed 1% of the insurance company’s paid-up equity capital. The Amendment Act, upon its commencement, will increase the per-transfer threshold in (b) above from 1% to 5%.  The amendment will reduce the compliance burden on insurers where shareholders are seeking to transfer a nominal number of shares (i.e., less than 5%), and improve the ease of doing business in the sector.  That said, the approval requirement highlighted under (a) above will continue to apply independently, and therefore, IRDAI approval will be required for transfers where the shares intended to be transferred aggregate to less than 5% but the transfer is likely to result in the transferee’s shareholding in the insurance company aggregating to more than 5% when aggregated with the transferee’s pre-existing shareholding in the company. Reduction in the net-owned fund requirements for foreign reinsurers: The Insurance Act currently requires foreign reinsurers seeking to operate in India to have net owned funds of at least INR50 billion. The Amendment Act, upon its commencement, will lower the net-owned fund requirements for foreign reinsurers who establish a branch in India to INR10 billion.  This relaxation is expected to encourage the entry of new foreign reinsurers into the Indian market. Extension of certain obligations of life insurers to all insurance companies: The Insurance Act currently requires insurers engaged in the life insurance business to comply with several additional compliance requirements. These requirements include the requirement to: (a) cause an actuary to annually investigate the financial health of its business; (b) not appoint an officer or managing director of another life insurance company, banking company or investment company as its managing director or officer; (c) undertake a prescribed percentage of life insurance business in rural and social sectors (this requirement also applies to insurers engaged in the general insurance business); and (d) adhere to restrictions on declaring and paying dividends to shareholders and bonuses to policy holders.  The Amendment Act, upon its notification, will extend these obligations to insurers engaged in any class of the insurance business, including health insurance, general insurance and reinsurance.  In addition, the Amendment Act will also allow the IRDAI to appoint an administrator to supersede the board of directors of any insurance company and manage its affairs if it determines that the insurer is acting in a manner that is likely to be prejudicial to the interests of its policyholders. Non-life insurers may find it difficult to undertake rural penetration in India as their pricing and business models may not be geared for this.  However, an annual actuarial assessment of the financial health of non-life insurance companies may be a good thing to increase accountability and better protect policyholders. One-time registration for insurance intermediaries: The Insurance Act currently requires insurance intermediaries to renew their registrations every three (3) years. The Amendment Act will permit insurance intermediaries to hold their registrations in perpetuity subject to payment of an annual fee, unless the IRDAI suspends or cancels the registration.  This removal of a periodic renewal requirement will reduce a significant compliance burden for insurance intermediaries and further improve the ease of doing business in the sector. Increase in regulatory oversight: The Amendment Act will give more regulatory oversight powers to the IRDAI, such as: (a) a requirement to obtain IRDAI approval for any transfer or amalgamation of the non-insurance business of any company to or with the insurance business of any insurer (previously, this approval requirement only applied in respect of a transfer or amalgamation of any insurance business between two (2) insurers); and (b) an express recognition of the IRDAI’s right to issue directions for disgorgement where any person has made wrongful profits or averted losses by contravening applicable insurance laws. Enhanced penalties: The Amendment Act will increase the maximum penalty for violations of the Insurance Act and other applicable insurance laws from INR10 million to INR100 million. In addition, the Amendment Act also requires the IRDAI to take into account certain specified factors when determining the quantum of penalty for any contravention or default.  These factors include the nature, gravity, and duration of the default, whether the default is repetitive, whether any disproportionate gain or unfair advantage was derived, whether any loss was caused to policyholders, whether any mitigation actions were undertaken, and the number of policyholders impacted by such default.  The enhanced penalty framework and assessment based on specified factors is likely to strengthen regulatory deterrence while also providing clarity on determination of penalties by the IRDAI. Conclusion The Amendment Act and the Amendment Rules are forward-looking sector-wide reforms that are aimed at accelerating the Indian government’s goal of increasing insurance penetration and insurance density in India.  It marks an important step in updating India’s insurance regulatory framework to reflect current market needs and global best practices.  By allowing greater foreign investment and balancing compliance requirements, the amendments aim to promote growth while safeguarding policyholder interests.  Overall, the reforms have the potential to increase competition, attract greater participation, and support the development of a strong, transparent, and resilient insurance sector in India.

In the evolving world of corporate insolvency, one quiet revolution is unfolding in courtrooms and boardrooms: the rise of third-party funding. For distressed companies, funding is often the difference between resolution and ruin. And for India, still navigating the growing pains of its insolvency regime, Third-Party Funding (“TPF”) and Interim Finance (“IF”) are beginning to step out of the margins and into the mainstream. The Insolvency and Bankruptcy Code, 2016 (“IBC”) promised speed, efficiency, and revival. But it left a lingering question: how does a financially crippled company pursue costly legal claims or stay operational while doing so? TPF and IF now seem to be part of the answer. Significance of TPF in ecosystem of IBC Litigation is expensive. For companies already struggling to survive, the idea of pursuing avoidance transactions, fraudulent transfers, or even defending critical claims may seem like an unaffordable luxury. That’s where TPF steps in. Globally common, but still novel in India, TPF allows external funders to bankroll litigation in exchange for a share in the outcome. And it comes without recourse, if the case fails, the funder bears the loss. The Supreme Court’s green light in Bar Council of India v. A.K. Balaji (2018) opened the doors for this model in Indian courts. But, in insolvency, it’s still early days for Third-party funding. Third-party funding is not just about money; it’s about access to justice. It gives RPs the firepower to pursue claims that would otherwise be shelved. And, crucially, it aligns with the IBC’s mandate: maximizing value for all stakeholders. TPF contributes to the cause of keeping the Corporate Debtor as a going concern While TPF keeps beneficial litigations alive, Interim Finance keeps the company alive. Interim Finance is defined in Section 5(15) of the IBC, which refers to short-term borrowing during the Corporate Insolvency Resolution Process (“CIRP”), approved by the Committee of Creditors (“CoC”). It covers essential costs, from salaries and payments to utilities and asset protection. Section 25 of the IBC empowers the IRP to raise interim finance, subject to the approval of the CoC. The law treats ‘interim finance’ with priority. Section 53(1)(a) puts interim finance at the front of the repayment line, even ahead of secured creditors in liquidation. The RBI has attempted to encourage lenders by classifying such loans as ‘standard assets’. Still, banks remain reluctant to provide interim finance, out of the fear of no guaranteed returns, and priority displacement issues. Creditors hesitate to allow new money to outrank old debts. Regulatory uncertainty only makes it harder to attract grant of interim finance. In such backdrop, the courts have stepped in, like in the case of Edelweiss ARC v. Sai Regency Power, wherein the NCLAT reminded everyone that without interim finance, even a viable company might collapse. It was stressed that value isn’t just in the assets, it’s in continuity. Contributions of TPF as IF So, what happens when third-party funders go beyond funding of mere litigations? In such backdrop, a new model emerges, where TPF begins to plug in the gaps left by traditional IF. Interestingly, the external funders are now showing interest in financing not just legal claims but also operational continuity. Non-recourse funding becomes a tool for resolution professionals to run the business and chase legal rights without draining estate resources. The benefits are immediate: RPs get capital without repayment pressure. Funders do due diligence, boosting confidence in claims. Corporate Debtor stay afloat while claims mature. The CoC sees higher chances of resolution over liquidation. Pertinently, it’s not just financial support, it’s strategic alignment, contributing to the objectives and scheme under the IBC ecosystem. Challenges in the implementation of arrangements for TPF & IF Significantly, the promotion of both, TPF and IF, have to face hurdles. In the case of TPF, the lack of regulatory framework creates discouragement in the reaping of benefits of such beneficial arrangement. India does not have law and regulatory regime, governing third-party funding. Some states, like Maharashtra and Gujarat, have allowed it through amendments to the Code of Civil Procedure. But there’s no uniformity. In such backdrop, there are obvious concerns around TPF, like, (a) whether funders can influence litigation strategy? (b) concerns with respect to confidentiality and privilege, (c) how do courts ensure fairness, keeping in view the interest of funder as against the interest existing under the scheme of IBC? In jurisdictions like the UK and Singapore, these concerns do have answers in the form of their own established regulatory regime, however, in India, such regulatory regime has not yet seen the light of day yet. Similarly, the arrangement of interim finance has its own bottlenecks. Banks worry about promoter-related parties benefiting indirectly. They are unsure how to provision for such loans. And in the backdrop, where NPAs are still a sensitive topic, very few would want to take a risk on a company facing CIRP. Global perspective with respect to TPF It would be useful to refer to the regime being followed in other jurisdictions with respect TPF. In that regard, in United Kingdom, the litigation funders follow a self-regulatory code under the Association of Litigation Funders. Further, Singapore and Hong Kong have legalised and structured TPF in international arbitration. Even in the context of India, the judicial precedents has been encouraging with respect to resort to TPF. From the Privy Council’s 1867 ruling in Ram Coomar Coondoo vs. Chunder Canto Mookerjee to the Supreme Court’s A.K. Balaji judgment, Indian courts have made space for funding, provided it’s fair, transparent, and arms-length. Apart from Judicial moves, the recent policy moves are also significant. In February 2025, the IBBI proposed allowing interim financers to observe CoC meetings, enabling protection of their interest. It’s a small step, but signals that regulators are listening. The Road Ahead Since implementation of IBC in the year 2016, the regime has seen overwhelming “debt resolution”. Now the thrust is upon achieving progress in “Insolvency Resolution”. In that course, India’s insolvency regime is still maturing. In this backdrop, if TPF and IF are nurtured, through clear rules, transparent disclosures, and supportive jurisprudence, they could prove to be game changes in this exercise. Because at its heart, insolvency isn’t just about winding up. It’s about revival, resolution, and restoration of value. And that requires money, sometimes from unexpected places. Authors: Jyoti Kumar Chaudhary, Senior Partner Nikita Sharma, Associate