New Delhi: Amendments to the insolvency and bankruptcy code are likely to include provisions to help India access the foreign assets of insolvent firms. Besides, there are plans for provisions to enable the government collaborate in foreign insolvency cases where such insolvent firms have Indian assets.

Top officials said the finance ministry was very keen that such amendments be incorporated keeping in light the Nirav Modi-case. The absconding diamantaire's firm is trying to wind up its US business in a way to forestall Indian banks from accessing wealth stashed abroad.

Three Nirav Modi companies - Firestar Diamond Inc, A Jaffe Inc and Fantasy Inc - have filed for bankruptcy in the US. Indian banks have little chances of recovering any money which may have been siphoned out of the country and taken to the US.

Such a situation may arise if the US courts first allow the proceeds from a bankruptcy sale to be distributed among American banks and then allow the promoters to take the rest. Slueths have also found evidence of how money was siphoned from India to Nirav Modi-firms in Hong Kong, UK and in Europe. However, officials said that getting that money back could be a mammoth task.

UN laws

The relevant bankruptcy code changes require India to agree to the United Nations Commission on International Trade Law. The government is likely to recommend such accession and align the insolvency code to the UN model law, officials said.

This will enable New Delhi to seek the collaboration of foreign courts in oversees bankruptcies and get access to foreign assets of Indian firms.

"There is a general clause on co-operating with foreign agencies to access foreign assets of firms under the insolvency and bankruptcy code (IBC).

"But we need specific clauses and to atune our law to global conventions to be able to actually get assistance from foreign courts to manage to get hold of such assets," said top officials.

A committee set up by the government to recommend changes in IBC has already given its report to the finance minister.

Key changes

Officials said they would also bring an amendment which would allow bankers and other financial creditors who held debt converted-into equity shares of a bankrupt company to be part of the committee of creditors.

Currently, related party disclosures of shares held in the firms undergoing insolvency preclude such membership. The percentage of votes required for a decision in the committee of creditors charged with selling a bankrupt firm could also be reduced from the current 75 per cent to 66 per cent.