My creditor has initiated IBC insolvency proceedings against my company in Jodhpur; 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 defences to contest the application.

Here are some potential defences you may consider:

• Existence of Dispute: Under Section 8 of the IBC, you can argue that there is a genuine dispute regarding the debt. If you have raised an issue regarding the quality of goods or services or if there is an ongoing arbitration, this may be a strong defence.
• Debt is Not Due: You can assert that the debt claimed by the creditor is not due or has already been paid. This may involve presenting documents such as receipts or bank statements as proof.
• Time Barred Debt: If the debt is older than the limitation period prescribed under the Limitation Act, 1963 (generally three years), you can argue that the claim is barred by limitation.
• Improper Service of Demand Notice: According to Section 8 of the IBC, the creditor must serve a demand notice before initiating proceedings. If the notice was not properly served, this could be a valid defence.
• Corporate Debtor’s Financial Condition: You may argue that the company is not insolvent and can pay its debts, supported by financial statements or cash flow projections that demonstrate solvency.
• Non-Compliance with Procedural Norms: You can challenge the application based on non-compliance with procedural requirements as laid out in the IBC and related regulations.

In terms of the corporate debtor's position, it is essential to understand the following:

• The initiation of insolvency proceedings puts a moratorium on all recovery actions against the corporate debtor as per Section 14 of the IBC.
• The corporate debtor can file an application to the National Company Law Tribunal (NCLT) to seek dismissal of the insolvency application if valid defences are established.
• The corporate debtor has the right to appoint its own legal counsel and engage in negotiations during the corporate insolvency resolution process (CIRP).
• The corporate debtor must maintain transparency and cooperate with the resolution professional appointed by the NCLT.

Consulting with a legal expert specializing in insolvency law is advisable to effectively navigate the proceedings and maximize your defences.