My creditor has initiated IBC insolvency proceedings against my company in Cuttack; 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 (IBC), 2016, there are several defences you can raise to contest the proceedings. Your position as a corporate debtor is crucial, as you may have valid grounds to challenge the application.

Here are some potential defences you may consider:

• Lack of Default: You can argue that your company has not defaulted on the repayment of the debt as defined under Section 3(12) of the IBC, which states that a default occurs when a debt is not paid on the due date. Gather evidence to support your claim.
• Disputed Debt: If the debt is being disputed in a civil court or any other forum, you can present this as a defence. According to the Supreme Court ruling in Swiss Ribbons Pvt. Ltd. v. Union of India, a genuine dispute can be a valid ground to oppose the initiation of IBC proceedings.
• Operational Creditor Status: If the creditor is claiming to be an operational creditor, verify if the debt meets the criteria under Section 5(21) of the IBC. If the debt does not qualify, you can challenge the creditor's standing to file the application.
• Pre-existing Disputes: Present instances of prior disputes concerning the same debt, which can demonstrate that the debt is not payable as per the terms agreed upon.
• Financial Creditor Non-Compliance: If the creditor hasn't complied with the requirements of Section 7(1) of the IBC, such as providing proof of the debt or its default, you can argue that the application is not maintainable.
• Resolution Plan Viability: If your company has already proposed a viable resolution plan that is being considered, you can argue that the proceedings should not be initiated as there is an alternative resolution in process.

Additionally, you may wish to file an application under Section 65 of the IBC, if you believe the creditor has filed the application with malicious intent or to defraud your company.

Overall, the corporate debtor's position is to demonstrate that the initiation of insolvency proceedings is either unwarranted or lacks proper legal grounding. Engaging a legal professional with expertise in corporate law is advisable to navigate the complexities of the IBC effectively.