Yes, a company can initiate bankruptcy/insolvency proceedings against another company under the Insolvency and Bankruptcy Code (IBC). The IBC allows any operational creditor or financial creditor to file an application for initiating the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor (company) if the debt owed by the debtor is in default. An operational creditor is any person to whom an operational debt is owed, while a financial creditor is any person to whom a financial debt is owed. Both types of creditors have the right to initiate CIRP against a corporate debtor if the default amount is above a certain threshold limit. To initiate CIRP, the creditor must file an application before the National Company Law Tribunal (NCLT) along with the necessary supporting documents. If the NCLT is satisfied that there is a default and that the application is complete and in order, it will admit the application and initiate the CIRP process. During the CIRP process, a resolution professional is appointed to take control of the affairs of the corporate debtor and prepare a resolution plan to revive the company. If a resolution plan is not feasible, the company may be liquidated. It is important to note that the initiation of bankruptcy/insolvency proceedings by one company against another company is a serious matter, and can have significant consequences for both parties. Therefore, it is advisable to seek legal advice before initiating or responding to such proceedings.

Dear client, Yes, under the Indian legal framework, a company can initiate insolvency proceedings against another company. The law governing the corporate insolvency in India is insolvency and bankruptcy code, 2016. As per the provisions of the act a company owed a debt by another company can initiate corporate insolvency resolution process (CIRP) before the national company law tribunal (NCLT). Who can initiate the insolvency proceedings Financial creditors – These include banks, financial institutions, or any entity that has given financial debt to the corporate debtor. Operational creditors – These includes suppliers, vendors and service providers who have provided goods or services to the operational debtors. Corporate applicants – the corporate debtor itself can voluntarily initiate insolvency proceedings if it is unable to pay debts. A company that falls under the category of a financial creditor and operational creditor and it can be initiate the insolvency proceedings against another company. 1. Admitting and rejecting the applications- • The financial creditor, operational creditor or corporate debtor can file an application for insolvency before the NCLT to initiate the corporate insolvency resolution process (CIRP). • Once the application is filed after fulling all the requirements under section 7,9, or 10 of the insolvency and bankruptcy code 2016 the NCLT either admits the petition and appoints an interim resolution professional (IRP) • If the application is defective and does not fulfil the requirement then NCLT has the power to reject it. 2. Moratorium order When the NCLT admitting the insolvency petition, the NCLT under the section 14 of insolvency and bankruptcy code declares a moratorium which prevents • Lawsuit against the company • Prevent recovery of debts by the creditors • Attachment, sale or transfer of the company assets • Foreclosure pr enforcement of security interest by lenders. 3. Appointment of interim resolution professionals The NCLT appoints an interim resolution professional to take over the management process of the company asset ad to prepare a resolution plan. On the approval of the creditors then the IRP is later confirmed as the resolution professional (RP). 4. Approval or rejection of resolution plan • Once the committee of the creditors approves the plan with 66% of voting then the NCLT reviews and accepts it. • If there no viable plain is submitted by the resolution professionals the NCLT may order for liquidation of the company under the section 33 of insolvency and bankruptcy code, 2016. I hope this answer helps. In case of future queries please feel free to contact us. Thank you