Payment outstandings are very common in business. Sometimes businesses are not considering outstandings seriously. However, payment outstandings might lead to many legal complications. ₹1 crore or more is the minimum threshold required to trigger the Corporate Insolvency Resolution Process (CIRP) under Section 4 of the Insolvency and Bankruptcy Code (IBC).
For operational debts, the claim must be undisputed, and a proper demand notice must be served with no valid payment or dispute raised by the corporate debtor.
Not responding to an outstanding default of ₹1 crore easily breaches the minimum threshold under Section 4 of the IBC, allowing the aggrieved creditor to file a direct application at the National Company Law Tribunal (NCLT) to trigger the Corporate Insolvency Resolution Process (CIRP).
Operational creditors having outstanding 1 crore or more (individually) should not ignore follow up communications from debtors and must raise letter of dispute mentioning reasons of not releasing payments.
Pushkar Mer 