‘Winding up’ is the process preceding the liquidation of a company and extinguishment of its existence. A company can be wound up voluntarily, that is, the company’s members can willingly decide to terminate and deregister a solvent company by special resolution (for example, in circumstances where the company is no longer of any purpose or use). On the other hand, a ‘winding up application’ can be made to the Court by a creditor or other authorised person to have a company wound up compulsorily if it is insolvent. Our Sydney Insolvency Lawyers have extensive experience acting on both sides of the balance sheet, assisting both creditors and debtors deal with all aspects of winding up applications and winding orders, including the preparation of statutory demands.
Who can make winding up applications?
The Corporations Act 2001 sets out the various individuals or bodies that may have standing to make a winding up application. They include:
- The company itself;
- A creditor;
- A contributory;
- A director; and
Requirement for company to be insolvent
Prior to granting a winding up order, the Court must find that the company is insolvent. Creditors making an application for winding up will usually rely on a company’s failure to comply with a statutory demand as satisfying this finding; the Corporations Act 2001 requires the Court to presume that a company is insolvent if it fails to comply with a statutory demand. However, the Court is also required to presume that a company is insolvent if, during or after the 3 months after the winding up application was made:-
- Execution or other process issued on a judgment, decree or order of an Australian court in favour of a creditor of the company was returned wholly or partly unsatisfied;
- A receiver, or receiver and manager, of property of the company was appointed under a power contained in an instrument relating to a floating charge on such property;
- An order was made for the appointment of such a receiver, or receiver and manager, for the purpose of enforcing such a charge;
- A person entered into possession, or assumed control, of such property for such a purpose; or
- A person was appointed so to enter into possession or assume control (whether as agent for the chargee or for the company).
Regardless of whether you are a company facing a winding up application, or a creditor seeking a winding up order, our formidable Insolvency Solicitors have the expertise and professionalism to help you deal with your matter. Our leading Insolvency Solicitors have also assisted companies initiate a voluntarily winding up.
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