My creditor has initiated IBC insolvency proceedings against my company in Faridabad; 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 as a corporate debtor to contest the proceedings.

Here are the possible defenses and the corporate debtor's position:

• Existence of Dispute: Under Section 9(5)(ii)(d) of the IBC, you can argue that there is a pre-existing dispute regarding the debt. This could include any disagreements over the amount owed, the nature of the goods or services provided, or failure to meet contractual obligations.
• Financial Creditor Status: You can challenge whether the creditor qualifies as a financial creditor. If the debt in question is operational, the proceedings may not be valid under the provisions of IBC applicable to financial creditors (Section 5(7) and Section 5(8)).
• Default Not Established: You may assert that no default has occurred. The creditor must prove the existence of a default in payment of the debt, as established under Section 3(12) of the IBC.
• Time-Barred Debt: If the debt is time-barred under the Limitation Act, 1963, you can argue that the claim is not valid as it exceeds the limitation period of three years, as per Section 137 of the Limitation Act.
• Operational Creditor's Compliance: You can assert that the operational creditor did not comply with the requirements of issuing a demand notice under Section 8 of the IBC before initiating proceedings, which is a procedural requirement.
• Compromise or Settlement: If there is an ongoing compromise or settlement discussion with the creditor, you can present it as a defense, indicating that the proceedings should be stayed pending resolution.
• Proof of Payment: Provide evidence showing that the debt has been settled or paid off, negating the creditor's claim.

In the position of a corporate debtor, it is vital to respond promptly to the insolvency application and provide a clear rebuttal to the claims made by the creditor. The National Company Law Tribunal (NCLT) will assess the evidence and arguments presented by both parties before making a decision on whether to admit or reject the application for insolvency proceedings.

Additionally, seeking legal advice is advisable to navigate the complexities of insolvency proceedings effectively.