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We are a firm
dedicated to helping
companies, businesses
and individuals through
financially difficult
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Company - Winding Up Applications |
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Generally if a winding up application has been made, the applicant has a judgement against the company (if not an affadifit has been signed by the applicant or its representative stateing that the debt is not in dispute). The applicant must has issued a Statutory Demand against the company and that Statutory Demand has lapsed. Once that has lapsed the asumption by yhe court is that the company is insolvent so to prevent the company being wound up you must prove that the company is solvent. |
| This is where we are normally brought into the scene. Our first aim is to save the business and this usually involves negotiating with creditors to defer of withdraw the winding up application. If the company is insolvent then it needs some sort of remedy.
We run into the same creditors over and again, particularly the ATO and Workcover. The ATO are willing (as at February 2010) to give creditors a little slack but they are not interested in contrived stories. The rumour around the traps is that they are getting ready to get tough as they need to get as much money into the government coffers as they can. Workcover are very hard and do not want to give any slack at all. I understand that this is because they do not have the recourses to give to any negotiating process.
Sometimes to save the business we have to dump the company. This may sound strange but it happens all the time. The company has been trading badly and not necessarily mismanaged that it is not able to be saved. So we can save the business by selling it off to another company. There are all sorts of moral and legal issues that have to be handled but it happens all the time. If you try to cut corners or rip off the creditors the ASIC will prosecute you. SEE LINK.
The company will have assets and they will have to be disposed of correctly and swiftly. It is easier to do these things before the company is liquidated as once this happens you no longer have any say in the running of the company. There are moral issues as in staff entitlements and superannuation that must also be handled. Personal guarantees are another issue that have to be handled. These are often covered by sale of the director's personal assets.
Our position is always to work out the best strategy that best suits your situation, get your agreement on the plan and start work. TIME is usually out biggest enemy at this late stage.
One of the most asked questions that I get from the directors is “if the company is bankrupt do I have to go bankrupt”. The answer is “no”. The company and the director are two different entities and must be looked at in that light. |
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How an application for a winding up order is made.
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No more than 7 days before filing the application you need to arrange a search of the records maintained by the Australian Securities and Investments Commission (ASIC) in relation to the company that is the subject of your application. ASIC will give you a document with the results of the search. You may have to pay a fee to ASIC for the search. |
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Get a Corporations Form 2 and fill it out. Attach a copy of the statutory demand. This is the application. On this form you are called the applicant. You can get a copy of Corporations Form 2 from the Registry or download a copy from the Court's website. |
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Get a Form 20 and fill it out. Attach a copy of the ASIC search (which must not be more than 7 days old). This is the affidavit. You can get a copy of Form 20 and instructions on how to fill it out from the Registry or download copies from the Court's website. |
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The affidavit must: (A sample affidavit is set out in Federal Court (Corporations) Rules.) |
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(a) contain details of how and when the demand was served on the company; and |
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(b) contain details of the failure of the company to comply with the demand (eg. if this is the case, that no reply from the company has been received); and |
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(c) state whether and, if so, to what extent the debt, or each of the debts, to which the demand relates is still due and payable at the date when the affidavit is made. |
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The original application and affidavit must be delivered to the Federal Court. You can do this by bringing the documents to the Registry, or by posting or faxing them, or by sending them by the internet. This is called filing. More information about filing is available from the Registry and on the Court's website. (The affidavit must not be more than 7 days old at the time of filing, and if you file your application within three months of the date when the company failed to comply with the statutory demand, the Court will presume that the company is insolvent (section 459C(2)). ) |
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Pay the application fee. If you cannot afford this fee you can ask the Court to waive it. Some people are also exempt from paying fees (for example, if you have been granted Legal Aid or are the holder of a health care card). You can get a form to ask the Court to waive or grant an exemption from the fee from the Registry or download a copy from the Court's website. |
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If the documents are in the correct form Registry staff will stamp the original and the copies. The Registry will also write on the application the time and date when the matter will first be considered by the Court at a directions hearing. |
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Arrange for a stamped copy of the application and affidavit to be served on the company within 14 days of filing the application in the Court (section 465A) and not less than 5 days before the directions hearing date (rule 2.7). For more information about service see section 109X of the Corporations Act 2001. |
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File an affidavit stating how and when the application was served on the company. |
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Other compulsory steps to be taken before the directions hearing |
Notify ASIC of application
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1. |
Get a copy of Form 519 under the Corporations Regulations and fill it out. The form is available online at ComLaw or you can get a copy from ASIC. |
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Lodge the Form 519 with ASIC no later than 10.30 am on the next business day after filing of the application. |
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Get a copy of Form 20 and write how and when ASIC were notified of the application. Attach a copy of the Form 519. This is the affidavit proving notification. |
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File the affidavit before the first directions hearing. |
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Obtain the agreement of a person to act as a liquidator if a winding up order is made. Get a copy of Corporations Form 8 and fill it out. This is the Consent to Act as Liquidator form. |
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File the consent in the Court prior to the directions hearing. |
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Serve a copy of the consent on the company at least 1 day before the directions hearing. |
Publish notice of application
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Get a copy of Corporations Form 9 and fill it out. This is the Notice of Application for a Winding Up Order. |
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Publish the notice in a daily newspaper circulating generally in the State or Territory where the company has its principal or last known place of business. (The publication must take place at least 3 days after the application was served on the company and at least 7 days before the directions hearing.) |
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Get a Form 20 and fill it out annexing a copy of the published notice. This is the affidavit proving publication. |
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File the affidavit before the first directions hearing. | |
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