For suppliers and service providers, the Insolvency and Bankruptcy Code offers a route that ordinary recovery suits do not: the prospect of the debtor company being taken into a corporate insolvency resolution process. Used well, it concentrates minds quickly. Used badly, it ends at the admission stage.
Start with the demand notice
An operational creditor must first deliver a demand notice under Section 8 in the prescribed form. The corporate debtor then has ten days either to pay or to point to a dispute that existed before the notice. The quality of this notice — the invoices, the computation, the delivery record — frequently decides the case.
The pre-existing dispute test
The Adjudicating Authority will not decide a genuine dispute between the parties; it asks only whether one existed before the notice and is not spurious or illusory. Contemporaneous correspondence matters more than anything filed later.
Thresholds and timing
The minimum default is currently ₹1 crore. Limitation, part-payments and acknowledgements in balance sheets can all affect whether a claim is in time, and should be checked before filing rather than after an objection is raised.
Where a Section 9 application is not the right fit, the same groundwork supports a commercial suit, an MSME reference or arbitration. The choice of forum is itself a strategic decision.
This note is general information, not legal advice. For advice on your own matter, see our Commercial, Insolvency & Bankruptcy Litigation practice or contact the firm.
