A Section 7 or Section 9 petition turns on completeness, proof of default and — for operational creditors — the absence of a pre-existing dispute under the Mobilox test. AMLEGALS drafts admission-ready petitions and builds dispute defences that decide the case at the threshold.
In insolvency, the admission hearing is not a preliminary — it is often the whole war. Admission triggers the moratorium, displaces management and starts the resolution clock; rejection leaves the creditor to ordinary recovery. So the contest concentrates at the threshold: did a default of at least one crore occur, is the application complete, and — for an operational creditor — is there a genuine pre-existing dispute that bars the petition.
The Mobilox test governs that last question. The tribunal does not decide the dispute; it asks only whether the debtor has raised a plausible, non-illusory contention. A well-advised debtor documents its dispute before the demand notice; a well-advised creditor anticipates and dismantles the manufactured dispute in the petition itself. AMLEGALS prepares both sides with that asymmetry in mind, so nothing material is left to the hearing.
Classifying the debt as financial or operational, verifying default above the one-crore threshold and assembling proof.
Drafting and serving the Section 8 demand notice for operational creditors and managing the ten-day response window.
Preparing a complete, admission-ready Section 7 or Section 9 application with all statutory annexures and information-utility records.
For debtors, raising and substantiating a pre-existing dispute under the Mobilox test to resist admission.
Advocacy at the admission hearing, on completeness, default and the proposed interim resolution professional.
Managing the consequences of admission — moratorium, public announcement and handover to the resolution professional.
Section 7 of the Insolvency and Bankruptcy Code allows a financial creditor — a lender whose debt carries interest or the commercial effect of borrowing — to apply for insolvency on proof of default. Section 9 allows an operational creditor — a supplier of goods or services, including employees and the government — to apply, but only after serving a demand notice under Section 8 and only where the debtor has not raised a pre-existing dispute. The evidentiary burden and the procedure differ significantly between the two.
For an operational creditor, yes. Section 8 requires delivery of a demand notice or a copy of an invoice demanding payment before a Section 9 application can be filed. The debtor then has ten days to either pay or bring to the creditor’s notice an existing dispute or a record of pending suit or arbitration. A financial creditor under Section 7 does not need a demand notice but must establish the debt and the default, often supported by a record from an information utility.
An operational creditor’s petition must fail if, before the demand notice, there was a genuine dispute about the debt. In Mobilox Innovations Pvt Ltd v Kirusa Software Pvt Ltd (2017), the Supreme Court held that the tribunal must only be satisfied that there is a plausible contention requiring further investigation and that the dispute is not spurious, hypothetical or illusory — it need not finally adjudicate the dispute. A real and substantial pre-existing dispute is therefore a complete defence to a Section 9 petition.
The application must be in the prescribed form, establish the debt and the default above the one-crore threshold, propose an interim resolution professional (for Section 7, and optionally for Section 9), and be complete in all respects. The tribunal examines whether a default has occurred, whether the application is complete, and whether any disciplinary proceeding is pending against the proposed professional. If satisfied, it must admit the application; defects, if curable, are given an opportunity to be rectified.
The Code contemplates that the tribunal will ascertain the existence of default and admit or reject the application within fourteen days, though in practice timelines vary with docket load and contest. Admission triggers the insolvency commencement date, the moratorium and the appointment of the interim resolution professional, so the admission hearing is the decisive moment that both applicant and debtor prepare for most intensively.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
Share the debt, the default and your role for a confidential preliminary assessment of the petition or defence.