My creditor has initiated IBC insolvency proceedings against my company in Saharanpur; 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), you can raise several defenses to challenge the application and protect your interests as a corporate debtor.

Here are key defenses you may consider:

• Existence of Dispute: You can argue that there is a genuine dispute regarding the debt. According to Section 8(2)(a) of the IBC, if there is a pre-existing dispute regarding the amount or existence of the debt, the application for insolvency can be rejected.
• Debt Not Due: If the debt claimed by the creditor is not due or payable, you can assert this as a defense. For example, if the payment is contingent on a future event, the application may be contested under Section 9(5)(ii) of the IBC.
• Payment of Debt: If you have already made the payment or settled the debt, you may present evidence of the same to prove that the creditor’s claim is invalid.
• Improper Service of Demand Notice: Under Section 8 of the IBC, the creditor must serve a demand notice. If the notice was not properly served or the timelines stipulated were not adhered to, it may serve as a ground for dismissal.
• Fraudulent or Undue Preference: If the creditor has engaged in fraudulent activities or has shown undue preference to certain creditors over others, it can invalidate their claim. This is governed by Section 66 of the IBC.
• Not a Financial Creditor: If the creditor is not classified as a financial creditor under Section 5(7) of the IBC, you can challenge the application based on the creditor's eligibility.

As a corporate debtor, your position is protected under various provisions of the IBC. You have the right to:

• Challenge the admission of the application by filing a response within the stipulated time.
• Present evidence and documentation to support your defenses during the hearing.
• Seek interim relief under Section 14 of the IBC, which imposes a moratorium on any recovery actions against the corporate debtor once insolvency proceedings are initiated.

It is advisable to engage legal counsel experienced in insolvency law to navigate the complexities of the proceedings effectively and ensure that your defenses are appropriately raised in the National Company Law Tribunal (NCLT).