Section 9 of IBC : Section 9: Application For Initiation Of Corporate Insolvency Resolution Process By Operational Creditor

Explanation using Example

Imagine a scenario where ABC Pvt. Ltd. provided IT services to XYZ Corp. and raised an invoice of $50,000 for services rendered. Despite multiple reminders, XYZ Corp. fails to make the payment. After the due date, ABC Pvt. Ltd. sends a formal notice demanding payment as per the Insolvency and Bankruptcy Code. Ten days pass without any payment or dispute notice from XYZ Corp.

ABC Pvt. Ltd. then decides to initiate a corporate insolvency resolution process against XYZ Corp. They file an application with the National Company Law Tribunal (NCLT), which is the Adjudicating Authority in this context, along with the required documents and fee.

The documents include the unpaid invoice, an affidavit stating that no dispute has been raised by XYZ Corp., and a statement from ABC Pvt. Ltd.'s bank confirming that the payment has not been received.

ABC Pvt. Ltd. also proposes a resolution professional in their application. The NCLT reviews the application and, finding it complete and without any record of payment or dispute, admits the application. XYZ Corp. is then put through the corporate insolvency resolution process starting from the date of admission of the application, with the aim to resolve the unpaid operational debt.