Winding up a corporation

There are a number of grounds for a corporation to be wound up. Not all of these concern the corporation's insolvency, though it is the most common basis for applications for winding up.

This article focusses on winding up applications that seek to rely upon the failure of a corporation to comply with a valid statutory demand.  The creditor must have at least one debt that is “due and payable” by the debtor company at the time that the statutory demand is issued.  For more information on statutory demands please see our previous article.

The period for compliance with a statutory demand expires on the date that is 21 days after the statutory demand was served on the debtor company.  The creditor is then entitled to commence proceedings to have the debtor company wound up.

Unless an application has been made by the debtor company to set aside the statutory demand under section 459G of the Corporations Act 2001 (Cth), the creditor may commence proceedings with an Originating Process to have a debtor company wound up.  A copy of the statutory demand, including the affidavit verifying the demand must be annexed to the Originating Process.  The Originating Process must be accompanied by a supporting affidavit.

It is important to remember that the Originating Process must be filed within three months of the expiry of the statutory demand.  The application must also be determined by the Court within a period of six months.  The Originating Process is automatically dismissed after six months have passed, unless the Court has granted an extension of that period.

In many cases, the first return date will in fact be the date on which the application to wind up the debtor company is finally heard and determined.  Unless there is active opposition by the debtor company, and provided that all the procedural requirements have been satisfied, there is no reason why the application should not be heard and determined on the first return date.

This article constitutes general guidance only.  Please contact Fletcher Law if you require legal advice.