If I don't respond to lawyer notice, what further actions can the other party take?

My father borrowed money(without interest) from his colleague and returned it after his retirement. We don't have proof about this matter. He expired after few months. The other party is demanding interest now. After 4 months of his demise, we got a lawyer notice. But we didn't respond to it. My dad didn't sign on any papers.......even if he signed, is it valid now? Please help me out. We came to know that he is trying to send notice through court. Are we liable for this? What further actions can he take? How shall we respond to this?