Why India's Insolvency Law Must Catch Up with the Digital Economy

The Insolvency and Bankruptcy Code, 2016 was built on a promise: that a financially distressed company is worth more rescued than dismembered, and that its value should be maximised for the benefit of all stakeholders. That promise was written for an economy of factories, inventory and machinery. It is now being applied to an economy whose most valuable companies own almost nothing physical. Their worth lives in software, algorithms, artificial-intelligence models and, above all, in vast databases of personal information. This paper argues that the Code's value-maximisation mandate is increasingly strained by asset classes it was never designed to apprehend, and that the strain is sharpest where insolvency law meets data-protection law. When a digital business fails, its customer database is at once its most saleable asset and a collection of individual rights protected by the Constitution and, since 2023, by statute. The Code tells a resolution professional to maximise value; the Digital Personal Data Protection Act, 2023 tells the same person that personal data may be processed only with consent and only for limited purposes. Neither statute was drafted with the other in mind. Using a doctrinal and comparative method, the paper examines how the United States, the United Kingdom, the European Union and Singapore have begun to reconcile these pressures, and it proposes a reform framework for India: clearer treatment of digital assets in valuation, specialised technical expertise for resolution professionals, a statutory bridge between the Code and the DPDP Act, and safeguards for cross-border and going-concern preservation. The central claim is simple. Insolvency law cannot maximise value it cannot see, and it must not maximise value at the cost of rights it is bound to respect.