The government is likely to introduce a confidentiality clause under group insolvency regulations to prevent the leak of sensitive information among the resolution professionals (RPs) within a corporate group and to competition, even as the resolution process is under way. Also, to start with, resolution of stress in corporate groups will exclude the foreign subsidiaries and affiliates of the conglomerate, as it is felt that a coordinated mechanism with overseas jurisdictions and necessary legal processes might take time to evolve.
According to official sources, the confidentiality clause among RPs is intended to ensure that the valuation of individual group entities undergoing resolution is not undermined. The IBC Amendment Act 2026, which received the President’s approval last month, also provides for the appointment of a common insolvency professional (IP) to oversee the group-level resolution strategy. Individual RPs will be appointed for different entities within the corporate group.
Protecting Valuations
“The IBBI regulations might provide a clear protocol for sharing confidential information within the group. Given that entities across the corporate group may access sensitive materials, the framework will provide for appropriate non-disclosure obligations,” an official said. A confidentiality clause will also protect the passing of sensitive information to competition, the person noted.
Additionally, the new regulations will likely prescribe eligibility criteria for a coordinating IP, including enhanced managerial capabilities and relevant industry experience, and clarify the extent to which firm-level RPs can delegate authority to the coordinating IP to facilitate timely and efficient action. “Allowing individual RPs of group companies to delegate responsibilities to the group-level IP will enable quicker decision-making,” the official said.
Domestic First
The official said that since the cross-border insolvency framework is new in India, and will involve coordination across various jurisdictions, the Insolvency and Bankruptcy Board of India (IBBI) might introduce group insolvency rules that apply only to domestic firms of a corporate group.
“The foreign subsidiaries of a corporate group is likely to be excluded from the insolvency process,” the official said.
“A 2021 committee had recommended that India first enact and operationalise domestic group insolvency mechanisms, including procedural coordination, common RPs, and group-level committees of creditors, before considering the UNCITRAL Model Law on enterprise group insolvency,” said Srinivasa Rao, partner and leader (risk advisory services) at Nangia Global.
Further, IBBI will likely permit creditors to file a joint application for initiating insolvency proceedings against multiple entities within a corporate group. This will reduce costs and help the adjudicating authority quickly decide whether to accept the insolvency application.