A winding-up application (sometimes called a winding-up petition) is an application made to a court — typically the Federal Court or a state Supreme Court — asking the court to order that a company be wound up, or liquidated. A creditor who has served a statutory demand that has not been satisfied is commonly the applicant.
What the application means: If the court grants the winding-up order, a liquidator is appointed to take control of the company, realise its assets, pay debts in the order prescribed by law, and ultimately deregister the company. The company ceases to operate under its directors' control.
What a company can do when an application is filed:
- Pay the debt — if the debt is valid and the company can pay it, doing so before the hearing date will usually result in the application being discontinued.
- Oppose the application — if the company disputes the debt or has grounds to challenge the application, it can file an opposition in court. Legal advice is essential for this.
- Seek an adjournment — in some circumstances, the hearing may be adjourned to allow the company to make payment or resolve the dispute.
- Enter voluntary administration — in some cases, a company may appoint an administrator before the hearing, which can stay the winding-up proceedings.
A winding-up application is one of the most serious steps a creditor can take. If your company has received one, seek urgent legal advice and contact us immediately.
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