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ARTICLE · 19 AUGUST 2021

Group Insolvency Regime In India

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The increased consolidation in India Inc over the last few years has led to numerous instances of situations wherein the group holding company lands into indebtedness and is on the verge...

IndiaInsolvency/Bankruptcy/Re-Structuring
Abhirup Dasgupta
Abhirup Dasgupta
Faranaaz G. Karbhari
Faranaaz G. Karbhari
Akriti Shikha
Akriti Shikha
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The increased consolidation in India Inc over the last few years has led to numerous instances of situations wherein the group holding company lands into indebtedness and is on the verge of being insolvent, thereby impacting all its subsidiary companies, or vice-versa, wherein indebtedness of a subsidiary creates risk for the larger group. Such instances are categorized as 'group insolvency', which refers to the process of clubbing together the assets and liabilities of individual companies and undertaking the insolvency proceedings as one substantive consolidation of the holding company, its associates, and its subsidiaries.

On one hand, group insolvency seeks to balance the doctrine of separate legal entity as laid down in Salomon v. Salomon & Co Ltd1 while recognizing the practical reality that a consolidated insolvency process is advantageous for all stakeholders, as their resolution(s) can be consolidated before one court of law and combined assets can

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