My creditor has initiated IBC insolvency proceedings against my company in Bhubaneswar; 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), there are several defences you can raise to contest the proceedings.

As a corporate debtor, your position is that you have the right to defend the application and present any valid reasons against the initiation of insolvency proceedings. Here are some potential defences and key points to consider:

• Operational Debt Dispute: If the debt claimed by the creditor is disputed, you can argue that the debt is not due or payable. Under Section 8 of the IBC, a corporate debtor can respond to the demand notice stating the reasons for the dispute.
• Existence of a Pre-existing Dispute: If there is a legitimate pre-existing dispute regarding the operational debt, you can present evidence to support this. This is crucial as the NCLT may reject the application if a dispute is established (see Section 9(5)(ii) of the IBC).
• Debt Not Being Due: You can argue that the debt in question is not due or has been settled. Proof of payment or settlement can be presented as evidence.
• Improper Service of Notice: Under Section 8 of the IBC, a creditor must serve a demand notice to the corporate debtor. If the notice was not served properly or not received, this can be a valid defence.
• Time-barred Debt: If the claim made by the creditor is based on a debt that is time-barred under the Limitation Act, 1963, this can be raised as a defence.
• Corporate Governance Issues: If the creditor has not followed proper procedures in initiating the insolvency proceedings, you may use this as a defence. For example, if the creditor is not a financial or operational creditor, their application may be invalid.
• Wrongful Initiation: If the creditor has initiated proceedings for an ulterior motive or in bad faith, you can present evidence to show the wrongful initiation of the application.

It is critical to prepare your defence with adequate evidence and, if necessary, seek professional legal counsel to navigate the complexities of IBC proceedings effectively. The National Company Law Tribunal (NCLT) in Bhubaneswar will assess the merits of your defence under the provisions of the IBC, particularly under Sections 9 and 10, which govern the initiation of insolvency proceedings.