My creditor has initiated IBC insolvency proceedings against my company in Bhopal; what defences can I raise and what is the corporate debtor's position?
AJ Asked by Ajay Malhotra from India
Quick Answer
Under the Insolvency and Bankruptcy Code, 2016, a financial or operational creditor may initiate corporate insolvency resolution proceedings (CIRP) by filing an application before the NCLT if a default of one lakh rupees or more has occurred and is not disputed.
Detailed Legal Analysis
Under the Insolvency and Bankruptcy Code, 2016, a financial or operational creditor may initiate corporate insolvency resolution proceedings (CIRP) by filing an application before the NCLT if a default of one lakh rupees or more has occurred and is not disputed. As the corporate debtor, you can raise defences such as the existence of a pre-existing dispute regarding the debt, the debt being time-barred, or the default amount being below the threshold.
The NCLT will examine whether a default has actually occurred and whether a dispute genuinely exists. You may also approach the Madhya Pradesh High Court under Article 226 if the proceedings are arbitrary or vitiated by fraud.
Compliance with Madhya Pradesh Rent Control Act 1960 on stamp duty for related documents may also be relevant. Once admitted, a moratorium applies, and an interim resolution professional is appointed to manage the company's affairs.
Disclaimer: AI-generated for educational purposes only. Does not constitute legal advice. Consult a qualified practitioner.