Abstract:

In a world where money is more digital and borders are becoming virtual, can traditional  insolvency law continue to protect creditors and recover assets effectively? The rapid evolution  of trade in a digital environment, along with the emergence of fintech platforms and digital  assets, is causing a transformation in how cross-border insolvency is practiced. Traditional  insolvency laws, such as India’s Insolvency and Bankruptcy Code (IBC), were drafted prior to – or to respond to – the issues involved with physical assets subject to territorial limits.  Accordingly, they are obsolete in navigating the complexities introduced by an increasingly  digital economy. The paper examines technology, digital finance, and cross-border insolvency in  India, and illustrates the dilemmas and opportunities posed by its present economic landscape. 

This paper exposes several key challenges such as identifying and defining digital assets as  property for those without proper legal backing, developing jurisdiction to ascertain a debtor’s  Centre of Main Interest (COMI), addressing the valuation and volatility of digital assets, and  determining the legal effects of automated execution, via smart contracts. The paper also  addresses existing technology tools for insolvency administration – asset tracing through  blockchain, predictive modeling and validating claims using artificial intelligence (AI), and  virtual hearings and cross-border judicial coordination through digital platforms. 

The paper evaluates India’s draft framework for cross-border insolvency under the IBC and  comparing it with global models from Singapore, the UK, and the UNCITRAL Model Law,  emphasizing technological applications. It further discusses regulatory conditions such as data  sovereignty, cybersecurity, and regulatory compliance with emerging regulations for digital  assets. The research illustrates how technology can enable transparency, facilitate efficiency, and  provide creditors with protection while presenting new legal and operational challenges to  insolvency practitioners, professionals, courts, and regulators. 

Based on doctrinal and comparative methods, an analysis of international practices to provide  policy recommendations to India to modernize its cross-border insolvency framework to meet  the demands of the digital economy. Policy recommendations include bilateral or multilateral 

cooperation, explicit recognition of digital assets, use of technology-enabled insolvency portals,  and improved judicial and regulatory negotiations. The paper articulates the importance of a  forward-looking, technology-enabled strategy for the successful resolution of insolvencies in an  increasingly globalized, digitalized financial context. 

Keywords: Cross-Border Insolvency, Digital Assets, Fintech, Blockchain, Insolvency and  Bankruptcy Code (IBC) 

Introduction 

Evaluating how insolvency law should develop in the context of technological change is to first  clarify its primary purpose. It is important to remember that technology, as a tool, is inherently  value-neutral — it is a tool to be used to achieve the ends which insolvency law pursues. While  different perspectives exist — some in favour of business rehabilitation, and others for orderly  liquidation — a common principle that stems from all insolvency laws is efficiency, to preserve  and maximise value (if at all) in the shortest time frame possible. 

An insolvent enterprise can be seen as a burning candle – it has a “portfolio” of value that will be  continuously diminished with the passage of time. An onus on time puts pressure on action, and  acting more slowly accelerates the loss of value possibilities and undermines confidence from  the soon-to-be-affected stakeholders. In this sense, time is the priority and efficiency is the goal.  Thus, we should not think of technological change simply as disruption, but rather as an enabler  of value preservation, providing increased speed, accuracy and efficacy in its central role in  value preservation functions. 

The rise of digital assets brings an additional layer of complexity. These assets create different  issues under insolvency laws, because, in contrast to traditional assets, digital assets often exist  on decentralised platforms, are intangible, and do not easily fit within existing asset categories or  classes of property. Their decentralised aspects complicate questions of jurisdiction, ownership,  and enforceability, and force insolvency systems to rethink how value can be identified, secured,  and disseminated in the digital economy.

No existing model law has yet been developed and widely agreed-upon which specifically  considers digital assets and AI tools in regard to the insolvency-estate context. The language in  the Model Law that refers to the inclusion of assets is rather generic and not specific to  digital/virtual assets 

Challenges 

The growing prevalence of digital ventures and crypto-based models are fundamentally altering  the global insolvency landscape. While multinational companies can operate across borders and  other jurisdictions, insolvency proceedings remain bound by territorial constraints, which results  

in serious legal, procedural and technological challenges. The two primary challenges outlined  below reveal how traditional insolvency regimes struggle to deal with collapses in the digital era.  

1. Jurisdictional Confusion and COMI Determination 

In the digital economy, companies are run through cloud infrastructure and virtual networks,  frequently operating with no physical footprint. Conflicts arise when determining the Centre of  Main Interest (COMI)—the primary jurisdiction for insolvency— when a company’s operations,  employees, servers and users are all global or multi-jurisdictional. This leads to jurisdictional  conflicts and a delayed recognition of a foreign proceeding. 

2. Uncertain Legal Classification and Valuation of Digital Assets 

Digital assets, such as cryptocurrency, NFTs (non-fungible tokens), and tokenized investments,  are typically unregulated and lack continuing value. The existing legal frameworks cannot  effectively distinguish these assets from other assets. For example, a recent study has indicated  inconsistencies regarding whether digital assets should be categorized as property, securities, or  strictly contractual rights. Their value is also subject to wide variances because of the nature of  the market ecosystem, and recovering assets or value from decentralized platforms remains  exceedingly difficult, both conceptually and from a technological standpoint. 

3. Data Privacy and Protection Issues 

In an insolvency investigation, there may be a process of collecting sensitive personal data  relating to customers (or transactional data) from the wallets or other global cloud networks they  may have utilized. Data protection laws, including the EU General Data Protection Regulation 

(GDPR) and India’s Digital Personal Data Protection (DPDP) Act, restrict transborder flows of  personal data. Insolvency professionals must make determinations regarding litigation when  potentially facing liabilities stemming from non-compliance with data protection laws relating to  assets being retrieved or to analyse their data. 

4. Technological Disparities and Cybersecurity Vulnerability 

Insolvency processes increasingly employ e-filing, digital or virtual hearings, blockchain  analytics, and AI-based tools for asset-tracing. Technological disparities among jurisdictions  affect implementation of these processes. Additionally, the lack of appropriate infrastructure in  developing countries often results in insecurity in regard to engaging in digital proceedings.  Digital insolvency records have also become subject to hacking and manipulation, raising  questions regarding confidentiality, authenticity, and data integrity. 

5. Insufficient Global Frameworks 

Current legal instruments, like the UNCITRAL Model Law on Cross-Border Insolvency of 1997,  were created for standard entities that possess tangible assets. Although the Model Law defines  the “insolvency estate” in broad terms – to mean “all assets of the debtor that are the subject of  the insolvency proceedings” – it doesn’t responsively mention digital or virtual assets. Because  the Model Law does not use language that specifically recognizes their existence, it raises  questions about how blockchain-based holdings or crypto wallets are to be treated during the  course of liquidation. 

1. The FTX Insolvency Case (2022–present) 

In 2019, Sam Bankman-Fried established FTX, which expanded to over 130 entities across a few  jurisdictions, including the U.S., Bahamas, Japan, and Australia, quickly becoming one of the  largest cryptocurrency exchanges worldwide. In November 2022, FTX filed for Chapter 11  bankruptcy in the U.S. Following a disclosure that billions in customer assets had been diverted  to an affiliated trading firm, Alameda Research. 

The case presents jurisdictional and technological challenges associated to digital insolvency.  Not only did concurrent proceedings occur in both the U.S. (Delaware) and a foreign jurisdiction  – the Bahamas, but disputes arose surrounding the issues of COMI and control over the assets.  Finding the proper jurisdiction to determine authority over the digital assets dispersed across the  globe proved a struggle for the more established insolvency framework. Investigating the  holdings also proved problematic as evidence of ownership, tracing, and valuation of crypto  assets, NFTs, and tokenized assets proved challenging due to their volatility and the  pseudonymous nature of ownership. ¹ 

Investigators employed the assistance of blockchain analytic firms to trace lost funds utilizing  transaction mapping powered by AI. The case signified a change in insolvency proceedings  where technology has been employed as paramount and central to the matter. The case indicates  exploring alternatives for harmonizing digital asset insolvency law on an international scale that  involves legal recognition, valuation standards, and enforcement mechanisms utilizing  technology.² 

1. The Voyager Digital Bankruptcy Case (2022) 

Voyager Digital Ltd., a cryptocurrency brokerage with operations in the U.S., filed for Chapter  11 bankruptcy in July 2022 after suffering significant losses resulting from the company’s  exposure to a failed crypto hedge fund, Three Arrows Capital. Voyager catered to clients around  the world, acting as a broker to multiple jurisdictions and on multiple blockchain platforms  where customers held crypto assets. 

The Voyager bankruptcy illustrates the uncertainty surrounding creditor rights to the  classification of digital assets as property. A significant issue before the U.S. Bankruptcy Court  in the case was whether the crypto tokens in customer accounts were property belonging to the customer or property of the bankruptcy estate³. This issue highlights the absence of clear  statutory legal recognition of digital assets under insolvency proceeding law.  

As with FTX, Voyager’s insolvency highlighted the instability of businesses reliant on a digital  asset and regulatory framework, and the ineffectiveness of existing cross-border bankruptcies.  The bankruptcy of Voyager also raised certain issues with the handling of data privacy and  cybersecurity issues, since the liquidators would be obliged to access client sensitive data held  across multiple cloud storage servers located around the world. ⁴ 

Existing Technological Tools in Insolvency Administration 

The digital transformation of insolvency administrators has given rise to a range of purpose-built  platforms and technologies to improve efficiency, transparency, and facilitate coordination across  jurisdictions. These digital technologies lead not only to improved domestic insolvency  processes, but they also provide the basic structural foundation for digital interoperability  between cross-border insolvency cases. The main areas of technological tools presently in use, or  on the horizon in the insolvency context, include purpose-built insolvency software, data  management & e-filing platforms, general productivity software, and the use of more advanced  technologies such as artificial intelligence, automation, and blockchain. 

1. Specialized Insolvency Management Software 

Purpose-built insolvency platforms (like Aryza Insolv, Turnkey IPS, Stretto, Epiq, and Kroll)  provide a comprehensive end-to-end resolution for insolvency practitioners (IPs) or  administrators. These platforms combine case management, automating workflows, compliance  monitoring, and auto-generation of reporting on a unified interface. The platforms typically  include an e-filing module (such as the OSB XML standards), creditor engagement dashboards,  automated reminders of statutory deadlines, and templated document generation. 

2. Data Management and E-Filing Platforms 

The rise of data repositories as well as e-governance platforms, which support the centralization  of information about corporations and insolvency, is a core part of digital infrastructure for  insolvency. 

(a) Information Utilities (IUs): 

In India, the National e-Governance Services Ltd (NeSL) is an example of a secure repository  that authenticates records of financial matters and defaults. Insolvency practitioners counsel IUs  to verify information regarding creditor claims and debt interactions, which reduces the ability to  engage in asymmetrical information and procedural disputes. IUs provide records that are  timestamped and tamper-proof to establish trust and transparency, which are incredibly important  in not only domestic insolvency but also cross-border insolvency. 

(b) Government and Regulatory Portals: 

Insolvency practitioners frequently interact with the MCA-21 portal of the Minister of Corporate  Affairs to receive real-time company data and compliance submissions. The e-filing and case  tracking portals of the National Company Law Tribunal (NCLT) similarly allow practitioners to  submit petitions electronically, upload evidence and track hearings. With these portals, the  traditional paper form of communication and information exchange is, like IUs, being  modernized within the scope of the insolvency process, to align with digital procedural  frameworks which are necessary, permit general concurrence and future engagement with  foreign insolvency regimes with standard behaviours and interoperable standards. 

3. General Productivity and Communication Tools 

In addition to insolvency-specific software, professionals are using more document management  and collaboration platforms to manage complex, multi-stakeholder processes.

• Document management systems like Google Drive, Dropbox, and SharePoint offer secure  cloud-based filing of large case files with limited access and version control to the legal team and  affected creditors. 
• Communication and collaboration tools like Zoom, Microsoft Teams, and Webex are helpful  for virtual court hearings, meetings of creditors, and negotiations, especially as some limitations  continue because of the pandemic. 
• Project-management tools like Asana and Trello help assign tasks, manage timelines, and report  on completion across distributed teams. 

While these general tools are not insolvency-specific, they are vital to maintaining collaborative  and time-sensitive conditions for insolvency processes while working across multiple  jurisdictions.⁵ 

4. Advanced and Emerging Technologies 

(a) Artificial Intelligence and Machine Learning 

Artificial Intelligence (AI) and Machine Learning (ML) are reshaping the administration of  insolvency by moving it from a reactive discipline to one involving predictive management.  Predictive analytics models can identify the warning signs of financial distress earlier than  traditional methods, allowing regulators and creditors to address insolvency issues before the  economic situation deteriorates. AI-based applications can also assist in the detection of fraud, as  these applications will recognize patterns consistent with shallow depth and preferential  transactions. Approximately similar can be inferred regarding ROSS Intelligence and Westlaw  Edge, which are both legal research platforms that assist Insolvency Practitioners (IPs) in a  similar manner as predictive analytics or AI technology. Using these legal research systems, IPs  can complete jurisprudential analysis more effectively and efficiently and identify a relevant  precedent across various jurisdictions. AI-assisted systems can also assist in the process of document review, claim verification, and discovery. AI-assisted document review improves  accuracy in the review process while reducing the administrative burden on IPs. 

(b) Automation Technologies 

Automation is also increasingly being applied to more computerized and procedural functions  and tasks, including, but not limited to, claims processing, document generation (ex., drafter  document templates), compliance (ex., Plan/order compliance with legislatively required  timelines), and filing updates. By introducing workflow automation with insolvency sites and  platforms, IPs can dedicate and manage more of their time discussing restructuring outcomes in  insolvency or coordinating internationally across borders. Automated reporting will also enhance  transparency for regulators and creditors under the same premise, as automated systems will  utilize the same timelines as prescribed in statute, the IBC. 

(c) Blockchain Applications 

The potential of blockchain is being investigated for secure, transparent, and tamper-proof  transaction ledgers originating from bankruptcy proceedings. Smart contracts can autonomously  execute specified insolvency-related actions (moving funds, transferring assets, etc.) as triggers  are met above pre-arranged criteria. Blockchain-based claim registries can make powerful  contributions to the establishment of trust among transnational stakeholders by introducing  immutable and real-time verifiable registries of claims, security interests, and payments. The  type of system contemplated above would present a revolutionary opportunity toward uniformity  in cross-border insolvency, facilitating a centralized zone of evidence for many jurisdictions. 

5. Synthesis and Relevance to Cross-Border Insolvency 

Together, these technologies will leverage the digital spine of contemporary insolvency  administration. At present, systems employing this architecture exist only at the domestic level,  but domestic frameworks employing standardized data formats, real-time communications, and  digital verifiability signal a move toward cross-border interoperability. Because cross-border  insolvency increasingly involves technology sector entities, digital assets, and distributed  creditors, applying AI-enabled analytics, blockchain-enabled record-keeping, and enhanced and 

secure data-exchange facilities will be necessary. Furthermore, specifically for India and other  emerging jurisdictions, institutionalization of these will be critical to enhancing transparency and  information flow and coordinating across borders efficiently, productively, and in the digital era. 

Global approach to cross-border insolvency  

A global evolution of cross-border insolvency systems involves increasing converging legal  harmonisation with evolving technological systems for international cooperation and  transparency. 

The global evolution of cross-border insolvency systems ties to two simultaneous trends: legal  harmonisation and technological modernisation. Given that insolvency is often associated with  multinational enterprises and/or the digital economy, countries and regional blocs have  developed cooperative systems that create avenues for every country to cooperate at some level  while ensuring coordination, and value preservation for creditors, and transparency for  stakeholders. The new legal basis for cooperation arises from various frameworks, while  operationalising the principles of cross-border insolvency emerges from new digital technologies  in coordinating mechanisms that leverage international cooperative benefits. This includes texts  such as the United Nation’s Commission of International Trade Law (UNCITRAL), and  frameworks such as, the European Union’s Insolvency Regulation (EIR Recast 2017), Finland’s  KOSTI portal, Portugal’s Citius, and Singapore’s integrated insolvency framework. 

1. The UNCITRAL Model Law: The Basis for Global Cooperation. 

The UNCITRAL Model Law on Cross-Border Insolvency is the most significant internationally  recognized framework of cross-border cooperation and was adopted in 1997. It puts in place a  process for the recognition of foreign proceedings, the access of foreign representatives,  coordination of multiple proceedings, and creditor protection. The five basic principles of access,  recognition, relief, cooperation, and coordination represent a model of modified universalism by  guiding courts to cooperate while taking into account domestic sovereignty. 

Though the Model Law is agnostic toward technology, it has become increasingly reliant on  digital interoperability. Many of the jurisdictions (the US, UK, and Singapore) adopted it while 

also implementing e-filing mechanisms, electronic communication among courts, and a digital  asset tracing tool. Thus, while the Model Law is adaptable and flexible to change, it is  worthwhile to note that its application is becoming evermore contingent on a digital  infrastructure to promote real-time cooperation and greater transparency. 

2. The European Union Insolvency Regulation (EIR Recast 2017): Digital Harmonisation  within a Region 

The EU Insolvency Regulation (Recast 2017) is an advancement of the UNCITRAL model at a  regional level. It comes into effect automatically in the Member States and does not require  recognition of proceedings by the Member States of the EU. The Regulation sets out harmonised  rules on jurisdiction, recognition, cooperation, and coordination, facilitating effective cross border restructuring within the single market. 

What differentiates the EU model is the inclusion of digital infrastructure. The Regulation  requires each Member State to have an electronic insolvency register that connects to the  European e-Justice Portal, hence allowing for creditors and stakeholders to access case  information in real time. A number of Member States are also trialling AI-supported translation  tools and electronic automatic recognition systems, again providing efficiency and accessibility  to the proceedings. The EU model therefore represents algorithmic co-ordination, where  technology, as opposed to traditional treaty frameworks, acts as the coordinating body. 

3. Finland’s KOSTI: Data-Driven Insolvency Governance 

The KOSTI portal in Finland provides a prime example of how smaller jurisdictions are utilising  technology to streamline insolvency administration. KOSTI is a single digital platform that  brings together filing documents, case monitoring, and the exchange of information and  communication among courts, administrators, and creditors. The platform provides for automatic  notifications, real-time case management, as well as an open data approach to facilitate  transparency. 

Finland’s development of a digitised means of coordinating the insolvency procedure has  resulted in swifter resolutions and reduced costs in administering the insolvency system, while  also contributing to UNCITRAL’s goal of promoting cooperation through technological  efficiencies. The KOSTI enterprise demonstrates how a combination of open data governance 

and digital automation can enhance access to insolvency, particularly for cross-border creditors  who are reliant on obtaining contemporaneous information on the state of varying insolvency  proceedings. 

4. Portugal’s Citius System: Judicial Efficiency through Automation 

Portugal’s Citius system is another example of a system of digitalisation to improve procedural  efficiency. Initially developed for the administration of the general court, Citius now assists in  the administration of insolvency cases with electronic submissions, online communications with  creditors and electronic payments of fees. Furthermore, the system allows for automatic  assignment of cases, and online, centralized document management, all of which improve speed  and reduces human error. 

Citius shows that judicial automation can supplement insolvency reform without sophisticated  legislative reform. Citius clearly demonstrates there is a balance between efficiency and  accountability through its audit trails and strict adherence to data-protection legislation. Citius  provides a model for developing economies in capacity to implement low-cost digital  governance in more straightforward insolvency cases.  

5. Singapore’s Integrated Insolvency Framework: Smart Regulation and AI Integration 

Singapore merges sophistication, legislative and technological. Its Insolvency, Restructuring and  Dissolution Act (2018) was developed as part of “Smart Nation” agenda, integrating e-litigation  portals, artificial intelligence capability case analytics and electronic creditor voting into its  insolvency ecosystem. Singapore participates in the Judicial Insolvency Network (JIN) to  facilitate cross-border cooperation through electronic frameworks for judicial communications.  

The model is emblematic of coordinated universalism via digital integration – a legal framework  consistent with global standards further developed with the use of technology. By leveraging  regulatory supervision and new tools like AI, Singapore is offering a blueprint for emerging  economies to be at the forefront of the tech-enabled insolvency ecosystem.  

The global cross-border insolvency framework is primarily based on the modified universalism  principle – a hybrid model that looks to balance sovereign boundaries and jurisdiction with the 

need for international cooperation. UNCITRAL model law on cross-border insolvency is the  baseline framework for modified universalism. 

Integrating AI into Cross-Border Insolvency Frameworks 

Artificial Intelligence (AI) is starting to make an impact in the field of cross-border insolvency  by providing efficiency, accuracy, and clarity in the delivery of complex multi-jurisdictional  financial cases. The data processing capabilities of AI enables insolvency professionals to follow  assets across jurisdictions, review, identify, and disclose fraudulent or hidden transactions, and  analyse vast amounts of financial information in seconds—in most situations a process that  would take weeks or months. AI predictive analytics can track indicators of early financial  distress which can assist regulators and companies to take preventive measures to avert  insolvency before it arises. AI can also provide seamless global efficiency through features such  as instant communication technology, multilingual document translation, and automatic  documents or case summaries which provide a much easier avenue for communication between  courts, creditors and insolvency professionals in different jurisdictions.⁶ 

1. AI enhances the speed of asset tracing by leveraging blockchain records and global financial  data to track hidden or transferred assets across jurisdictions. 
2. It offers predictive insights through machine learning models to analyse trends relating to  financial distress, assisting strategic decision-making and recovery planning. 
3. AI facilitates coordination across multiple jurisdictions by providing real-time communication  and sharing of information between courts, creditors, and insolvency practitioners. 
4. It also enhances case management by automating basic tasks like document review, claims  verification, and creditor classification, thereby minimizing administrative delays.  
5. These types of AI tools can assist the parties with accurate valuation of digital assets like  cryptocurrencies and create a fair process for creditors and transparent asset distribution. 
   
   
6. It creates transparency and accountability by decreasing human error and bias, thereby  resulting in more objective, data-informed decisions instead of experiential analysis. 
7. AI improves time and cost efficiency via complexity reduction, less manual effort, and  reduced time and motion during parts of the insolvency resolution process. 

Although using AI in cross-border insolvency has many benefits, there are also a number of  disadvantages. One issue is that AI systems and their outputs could have errors if the underlying  algorithm is biased, poorly trained, or is based on an incomplete dataset, which can have a  substantial impact on the fairness and legitimacy of ⁷insolvency processes. The costs associated  with using and maintaining AI technology will also impede adoption by smaller firms or  developing jurisdictions, creating unequal use of AI and technology based solutions. A further  challenge is the lack of legal clarity on the admissibility of AI, its accountability in legal  disputes, or the regulatory framework that governs AI and its use in decision-making with CVA  and cross-border insolvencies. Thus, the current reliance and use of AI is low, and where AI  systems are interpreting information, it is unclear, particularly with regard to prompts, how  interpreting AI outputs in complex matters are less preferable than a human’s legal knowledge,  experience and judgment.  

Building a Tech-Driven Legal Framework for Cross-Border Insolvency in Digital Assets 

The digitalisation of finance has not only generated different types of wealth, but has also  injected another layer of complexity to insolvency law. The emergence of cryptocurrencies,  tokenised assets, decentralised finance (DeFi), and blockchain transactions in short order, are all  stressing the insolvency systems in countries in a way that would have been unimaginable ten  years ago. How to manage, value and recover assets when they are not only technologically  different, but exist in multiple jurisdictions requires a departure from conventional legal thinking  to a technological way of thinking. The use of technology as a part of the process in an  insolvency is now a requirement, as opposed to a luxury, for the sake of justice, efficiency and  international cooperation. The cornerstone of this shift is the need for a statutory framework that is recognised by law and applies specifically to digital assets. Current insolvency laws in India  and more broadly do not yet delineate and define what a digital asset is (is it property, currency,  or something entirely new). Without that legal definition, insolvency professionals are uncertain  in their valuation, tracing, or distribution of those items among creditors. An entirely new  statutory framework should enumerate rights, obligations, and responsibilities in relation to an  insolvent digital asset ecosystem; while recognising cryptocurrencies, stablecoins, NFTs, and  tokenised instruments in a single unified legal definition. A statutory framework should also  provide for blockchain records and smart contracts as acceptable evidence of ownership,  enabling courts to accept cryptographic proof in evidence for ownership of an asset as readily as  paper documents. The framework, ideally developed with a view to international harmonisation,  could provide the foundations for a model law on a global basis, perhaps as an annex to the  UNCITRAL Model Law on Cross-Border Insolvency, specifically for digital assets. The  framework would allow courts and regulators, collectively and individually, to operate on a  cooperative basis under shared but flexible principles tailored to national regimes. In a world  where transactions occur across borders in seconds, there is a level of urgency to achieve  uniformity of legal understandings in respect to digital assets to promote protection to creditors  and to guard against regulatory arbitrage. It is equally important to have standardised protocols  for data sharing and digital exchanges of evidence. Digital insolvency cases will necessarily  involve the transfer of sensitive financial and personal data across borders. Without governance  in place, there is considerable risk of privacy violations, tampering with data, and cyber risk.  Standardised data use protocols— including protocols for encryption, classification and  authentication— would establish a framework, which will improve data sharing, making cross  border work safer and more transparent.  

Some of India’s own Information Utilities like the National e-Governance Services Ltd (NeSL)  show that authenticated records of debt and defaults can easily be created, stored, and accessed  securely. If these utilities were developed as a cross-border, networked platform, using DLT  (distributed ledger technology) and secure APIs (application programming interface) we could  see the timeliness, efficiency and reliability of global insolvency co-ordination improve. A  standardised “language” for civil and insolvency data means that courts, regulators and creditors  can all have access to verified information between themselves, in time, and without the need for  manual exchange protocols that can create delays and risks. Institutional reform is yet another 

key pillar. As digital asset insolvencies become more and more technical, there is a strong  argument for courts to have dedicated digital insolvency judges and digital asset insolvency  divisions in courts. These judges would be insolvency professionals with legal training, but with  additional knowledge and skill in blockchain technology, forensic accounting for  cryptocurrencies, cybersecurity, and valuation of digital assets. They will also have access to  sophisticated analytic tools that can allow them to trace crypto-transactions, scrutinise smart  contracts, and interpret on-chain data. In India, this could take the form of a dedicated Digital  Insolvency and Fintech Bench in the National Company Law Tribunal (NCLT) supported by a  technical committee under the Insolvency and Bankruptcy Board of India (IBBI). These expert,  specialised courts would ensure that legal rules of insolvencies are upheld as well as the  technical features of digital assets with no misunderstandings or delays that often happen in  traditional courts. In order to give these reforms an enforcement mechanism, a defined chapter  on digital assets and cross border insolvency should be added to the Insolvency and Bankruptcy  Code (IBC). This chapter could establish definitions, procedural standards to recognise foreign  digital insolvency proceedings, a structure for the use of blockchain-based employment records,  and examiners using tools assisted by AI.  

It should include safeguards to ensure that technology is utilized to augment, rather than replace,  human judgement – such as using judges to oversee algorithmic recommendations. Drafting  these provisions in the IBC would enable India to be a jurisdiction capable of addressing reality  of the digital economy, while conformity to best international practices.  

However, the development of a tech-based insolvency system is not merely a legislative and  infrastructure issue; it requires knowledge, culture and awareness. The world is in dire need of  the next generation of professionals who will have a website level of competence in the law and  technology. As a result, educational institutions, regulatory agencies, and professional  organizations will need to advocate for specialised programs on blockchain, fintech regulation,  and digital insolvency systems management. Courses and certifications targeted to insolvency  practitioners, judges and regulators, should have modules on tracing digital assets, valuation  floating crypto currencies and mechanisms for cooperating internationally. Concurrently,  campaigns for raising public awareness to equip investors and businesses with legal and financial 

knowledge about digital assets, will also encourage responsible participation in a maturing  marketplace. 

Finally, there can’t be innovation in technology in insolvency without international collaboration.  Digital assets have an open border nature, therefore their regulation and recovery must have an  open border nature also. India, along with other emerging economies, should proactively engage  with international governance organisations such as UNCITRAL, INSOL International, IMF and  World Bank, contributing to efforts to develop harmonised protocols on digital assets and  capacity-building opportunities. An International Digital Insolvency Coordination Forum  (IDICF)—based on the Judicial Insolvency Network (JIN)—should be developed as a forum  internationally for courts, regulators and professionals to centralise and share data, co-ordinate  investigations and develop cross border joint responses to cryptocurrency insolvency matters.  Fundamentally, the future of cross-border insolvency in the digital era can be facilitated by  connecting law, technology and human expertise. Establishing a statutory framework that recognises the legal status and status of digital assets, harmonising internationally accepted  models of information sharing, developing a dedicated digital division for insolvencies,  embedding these reforms in the IBC, and promoting public education and international  cooperation will transform insolvency from a reactive system, into a proactive ecosystem which  incorporates technology and its capabilities. It is not about addressing technology; it is about  ensuring that justice, transparency and accountability continue to thrive in a world where value,  itself, is becoming more virtual.⁸ 

CONCLUSION 

The transformation of the global financial system into a digital ecosystem has significantly  challenged the geographical and procedural boundaries of traditional insolvency law. As  observed in the FTX and Voyager Digital cases, the classification of digital assets necessitates a  paradigm shift in insolvency governance, supported by technology and transnational  collaboration. The current legal infrastructures, such as the UNCITRAL Model Law, are  insufficient to effectively classify, value, or respond to the jurisdiction of digital assets.  

The development of a technology-based insolvency system based on artificial intelligence and  blockchain with cross-border digital cooperation is an opportunity to improve transparency,  efficiency, and creditor protection. The technological revolution in insolvency administration  must occur within a transparent legal framework that strikes a balance between fostering  innovation and ensuring accountability. If India’s upcoming cross-border insolvency framework  is designed with explicit reference to digital assets, it can be positioned as front-running the  reform of insolvency legislation in the digital era. In conclusion, cross-border insolvency will be  shaped by an intersection of law, technology and human discretion. Recognition of digital assets  in statute, specialised digital insolvency benches, and global cooperation will establish  insolvency regimes that are resilient and adaptable to technological disruption. The firm  convergence between law and technology is no longer a decision—it is the only route that will  ensure fairness, consistency and justice in a borderless digital economy.⁹ 

¹Sullivan & Cromwell LLP, FTX Emerges from Bankruptcy Under $14 Billion Plan, Jan. 2025, available at  https://www.sullcrom.com/About/Rankings/2025/January/FTX-Emerges-Bankruptcy-Under-14-Billion-Plan

²Bankruptcy of FTX, Wikipedia, https://en.wikipedia.org/wiki/Bankruptcy_of_FTX (last visited Nov. 12, 2025).

³ Correspondence, In re Voyager Digital Holdings, Inc., Case No. 22-10943 (Bankr. S.D.N.Y. Aug. 15 2022), available  at https://cases.stretto.com/public/x193/11753/CORRESPONDENCE/1175308222250000000119.pdf

⁴Esha Dey & Yasin Sarfraz, Voyager customers beg New York judge for money back after bankruptcy, CNBC (Aug. 15  2022), https://www.cnbc.com/2022/08/1
5/voyager-customers-beg-new-york-judge-for-money-back-after bankruptcy.html.

⁵ MALIKA SINGH, “Navigating Cross-Border Insolvency In The Digital Age: Challenges, Trends, And Technological Innovations” Vol.6 & Issue 1, Law Audience Journal (e-ISSN: 2581-6705), Pages 34 to 48 (6th June 2025), available at https://www.lawaudience.com/navigating-cross-border-insolvency-in-thedigital-age challenges-trends-and-technological-innovations/

⁶ Christoph Henkel, The Impact of Artificial Intelligence on Insolvency Law and Practice, in Research Handbook on  Corporate Restructuring 377 (Paul J. Omar & Jennifer L. L. Gant eds., Edward Elgar Publ’g 2021).

⁷ Michael Edwards, Cross-Border Insolvency in the Digital Age: Challenges and Innovations, (2025) (on file with  author), https://michaeledwards.uk/cross-border-insolvency-in-the-digital-age-challenges-and-innovations/

⁸. Cross-Border Insolvency in the Digital Age: Challenges and Innovations – Michael Edwards | Commercial  Corporate Solicitor, https://michaeledwards.uk/cross-border-insolvency-in-the-digital-age-challenges-and innovations/ (last visited Nov. 12, 2025).

⁹https://journals.sagepub.com/doi/10.1177/0256090920946519