My creditor has initiated IBC insolvency proceedings against my company in Firozabad; what defences can I raise and what is the corporate debtor's position?

Detailed Legal Analysis

If a creditor has initiated insolvency proceedings against your company under the Insolvency and Bankruptcy Code, 2016 (IBC), you can raise several defenses to protect your interests as a corporate debtor.

Here are some potential defenses and considerations you may want to explore:

• Challenge the existence of debt: You can argue that the debt claimed by the creditor is invalid, either because it has been settled, is time-barred under the Limitation Act, 1963 (Section 9), or does not exist at all.
• Dispute the operational debt: Under Section 5(21) of the IBC, operational debt must be more than INR 1,00,000. If the amount claimed is less than this threshold, you can contest the application.
• Demonstrate a dispute: If there is a genuine dispute regarding the debt, which can be substantiated by documents or correspondence, you can argue that the insolvency application should be rejected as per Section 9(5)(ii)(d) of the IBC.
• Show that the application is filed in bad faith: If the creditor is using the insolvency process as a tool for coercion or to gain leverage in negotiations, this can be a valid defense.
• Point out procedural irregularities: Any non-compliance with the requisite procedural steps, such as failure to deliver a demand notice as mandated under Section 8 of the IBC, may also be grounds to contest the application.
• Prove that the company is solvent: If you can demonstrate that the company is not in a state of insolvency, as defined under Section 34 of the IBC, you can contest the claim effectively.
• Subsequent resolution plan: If a resolution plan has been approved or is in the process, you can bring this to the notice of the National Company Law Tribunal (NCLT) to show that insolvency proceedings should not be initiated.

As a corporate debtor, your position is critical. You are entitled to defend against the application filed by the creditor, and you must file your response within the stipulated time frame set by the NCLT. The NCLT will evaluate your defenses and determine whether to admit the insolvency application or not. The key legal framework guiding this process is the Insolvency and Bankruptcy Code, 2016, along with its associated rules and regulations.