What Both Sides Should Check After an IBC Demand Notice for Operational Debt

1. Check whether the claim is operational debt

Identify the goods or services, contractual relationship, invoices and basis of the amount claimed. Distinguish principal, interest, damages, deductions and disputed adjustments rather than presenting one unexplained total.

The creditor should be able to trace the amount to the underlying transaction and default.

2. Review the dispute history before the notice

Emails about quality, delivery, set off, defective performance, reconciliation or contractual breach may be important if they were sent before the insolvency demand. A dispute invented only after receipt of the notice is a different factual situation.

Corporate debtors should therefore preserve the earlier commercial record, not merely draft a fresh denial.

3. Verify service and form

The statutory demand process has prescribed forms and procedural requirements. Check the notice, supporting documents, amount, creditor identity and service record rather than assuming every document titled “IBC notice” is compliant.

For creditors, procedural accuracy reduces avoidable objections at a later stage.

4. Insolvency and ordinary recovery are different strategies

If the dispute is fundamentally about contractual liability requiring detailed adjudication, another forum may be more appropriate. The IBC should not be used simply as leverage where the statutory insolvency conditions are not met.

Conversely, an undisputed operational default should not be ignored merely because parties have previously discussed payment.

5. Consider settlement without obscuring the record

Commercial resolution may still be possible after a demand notice. If discussions occur, document instalments, waivers, withdrawal terms, default consequences and whether the arrangement replaces or preserves earlier rights.

Avoid ambiguous “settled” messages that do not identify the amount, timeline or effect on pending steps.

Core documents

The issue usually becomes clearer when the transaction and dispute history are read together.

• Contract, purchase order and invoices.
• Delivery/performance and acceptance records.
• Account reconciliation and payment history.
• before the notice dispute correspondence.
• Demand notice, proof of service and any response.