Are you owed a debt by a company? Winding Up could be your solution
ARE YOU OWED A DEBT BY A COMPANY? WINDING UP COULD BE YOUR SOLUTION
If you are a creditor owed a debt by a company incorporated under the Corporations Act 2001 (the Act), then you may wish to attempt to wind up that company to satisfy your debt. You will be entitled to apply to the Supreme Court or Federal Court to wind up the debtor company. There are several steps involved in making an application to wind up a company, a suggested procedure of which is as follows:
You will need to prepare a Statutory Demand under s 459E of the Act. Your Statutory Demand must comply with a series of formalities including;
Specifying the debt in the demand which must be in writing;
An affidavit confirming the validity of the debt must accompany the demand unless the debt is a judgment debt. The affidavit which you prepare must comply with the Supreme Court Rules.
The debtor company which is served with a demand must comply within 21 days, otherwise when the creditor makes a winding up application to the Court, the debtor company will not be able to oppose the application on grounds which are commonly relied upon to set aside a Statutory Demand.
The demand must be served on the registered debtor company by standard mail.
After 21 days from the date the statutory demand was received by the debtor company and no action is taken, the creditor should prepare an Originating Process for the winding up application. This will have to include an affidavit which supports the winding up and exhibits.
The Originating Process must be filed with the Court within 3 months of the date of the debtor company’s failure to comply with the Statutory Demand. The debtor company’s failure to comply is viewed as insolvency on the part of the debtor company, and this deemed insolvency is considered grounds upon which the company can be wound up.
When filing your documents at the Court, you must ensure to take the following:
Three copies of the Originating Process;
The affidavit in support of the application;
The affidavit of service of the Statutory Demand; and
A cheque for the Originating Process.
You must also immediately take a notice of filing the Originating Process to ASIC. This must be completed by 10:30am the day following the filing of the Originating Process, this is in accordance with s 465A(a) of the Act.
A consent to appointment as a liquidator must be prepared and sent to the Liquidator.
The Originating Process, accompanying affidavits and exhibits must be served on the debtor company within 14 days of filing with the Court. Service must be made to the registered office of the debtor company, but, if the company does not have a registered office, then service can be affected by leaving the documents with a member or employee of the company.
An affidavit of service must be completed by the person who has served the documents on the debtor company.
Since 1 July 2012, details of the application to wind up the debtor company must be entered onto ASIC’s website. Signed consent must have been obtained from the Liquidator prior to the filing of the notice.
You must then file the Consent of the Liquidator, affidavit of service and all other documents which have yet to be filed. The Consent of the Liquidator must be filed before the hearing.
If the winding up order is made, it is your obligation to inform the Liquidator of their appointment by no later than the day following the Order. The Liquidator must then publish their appointment on the ASIC website.
The Order must be lodged with ASIC no more than 2 days after it is made.
No more than 7 days after the Order is made, a copy of the Order must be served upon the debtor company. You must then ensure to deliver to the Liquidator a copy of the Order and a statement that the Order was served upon the debtor company.
You must finally receive the consent of the Liquidator for the taxing of costs. When you successfully have your costs taxed by the Costs Court, you will need to have the Order authenticated and served upon the Liquidator.
Upon following the above suggested method of winding up a debtor company, you will have successfully performed a winding up application in accordance with the Act.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.