In this practice area
Statutory demands and court applications to wind up an insolvent company, and applications by companies to set aside a demand or oppose a winding-up order.
When winding-up proceedings arise
A creditor owed money by a company can apply to the court for an order that the company be wound up in insolvency and a liquidator appointed. The most common path starts with a creditor's statutory demand. If the company does not pay or apply to set the demand aside in time, it is presumed to be insolvent, and the creditor can rely on that presumption in a winding-up application.
We act for creditors bringing these applications, and for companies and directors who have been served with a statutory demand and need to respond quickly.
The legal framework
A statutory demand is made under section 459E of the Corporations Act 2001 (Cth). The debt must be due and payable and at least the statutory minimum, currently $4,000. If the debt is not a judgment debt, the demand must be accompanied by an affidavit verifying the debt. The company has 21 days after service to pay, secure or compound the debt to the creditor's reasonable satisfaction.
A company may apply to set aside the demand under section 459G, but only within 21 days after service, and the application and a supporting affidavit must be filed and served within that period. The court cannot extend that time. Grounds include a genuine dispute about the existence or amount of the debt, an offsetting claim, or a defect that would cause substantial injustice. If the company does not comply, it is presumed insolvent under section 459C, provided the winding-up application is made within three months after the compliance period ends. The application is made under section 459P to the Federal Court or a State Supreme Court, and in the ordinary course must be determined within six months.
How these matters typically run
For a creditor, the steps are a careful demand, correct service at the registered office, and a winding-up application filed within the three-month window if the debt is not paid. The application must be advertised, and other creditors may seek to be substituted if the applicant is paid out. A company that did not apply to set aside the demand generally cannot later rely on the same grounds to resist winding up without the court's leave.
For a company, the 21-day period is the critical point. Once it passes, the options narrow sharply.
How GopherWood Lawyers acts
For creditors, we check that the debt is suitable for a demand before it is served, and prepare the demand, affidavit and application so they withstand challenge. For companies and directors, we assess the demand at once, identify any genuine dispute or offsetting claim, and file a set-aside application within time where the grounds exist. Where the company is in difficulty, we advise on the options, including settlement, security or a formal restructuring appointment.