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

Detailed Legal Analysis

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

Here are the key defenses you can consider:

• Existence of a Dispute: You can argue that there exists a genuine dispute regarding the debt. According to Section 8(2) of the IBC, if there is a dispute as to the amount due, the creditor must provide evidence to show that the debt is undisputed.
• Debt is Not Due: You can assert that the debt claimed by the creditor is not due or has already been settled. This could include presenting proof of payment or an agreement that nullifies the debt.
• Operational Creditors’ Category: If the creditor is an operational creditor, you can challenge their status by proving that the claim arises out of a transaction that does not meet the criteria under Section 5(20) of the IBC.
• Violation of the Moratorium: Under Section 14 of the IBC, once the insolvency proceedings are initiated, a moratorium is declared. If the creditor has violated this moratorium by initiating any action against the corporate debtor, you can raise this as a defense.
• Corporate Governance Issues: If there are procedural lapses in the initiation of the insolvency proceedings, such as failure to comply with the notice requirements under Section 8, you can contest the proceedings on these grounds.
• Insolvency is Not Inevitable: You may argue that your company is not insolvent and has the capability to repay its debts, especially if you can provide evidence of ongoing operations or potential revenue streams.

In terms of your position as a corporate debtor, Section 9 of the IBC allows you to respond to the insolvency application filed by the creditor. You must file your response within 14 days of receiving the notice. If the Adjudicating Authority (AA) finds merit in your defenses, it may dismiss the application. However, if it finds that the creditor's claim is valid and uncontested, the AA may initiate the Corporate Insolvency Resolution Process (CIRP).

It is advisable to engage a legal professional who specializes in insolvency law to navigate this complex process and ensure that your defenses are adequately presented.