What is a Wind-Up Application?
A wind-up application can be filed in court after a creditors’ statutory demand has been issued and 21 days has lapsed and the debt remains unpaid. The wind-up application requires the company to appear in court on a date specified in the notice. The notice will be served at the company’s registered office.
Can a Wind-up Application be set aside?
You may be able to challenge a wind-up application in a number of different ways. A successful opposition to a wind-up application will result in the court not ordering to wind up your company. While receiving a wind-up application is a very serious matter, there are several options available for your company to oppose the wind-up application which we have outlined below.
Pay off the debt in full
The best option if you can afford to do so is to pay off the debt in full before the winding up application is heard in court. Alternatively, you may be able to negotiate a repayment plan, however ,you may need to offer security for the payment plan. The risk here is that another creditor may approach the court and substitute in as a creditor and request that the company be wound-up.
Evidence of solvency
If you believe your company is solvent and the debt can be paid within a short period of time (i.e. the company is only suffering short term liquidity), then you will need to obtain expert evidence to prove that your company is solvent. If the court agrees with the expert’s report then it may set aside the winding up application.
Prove creditors have a better chance of repayment
Your expert would need to provide that creditors would receive a better return if the company is allowed to continue to trade as opposed to being wound up.
Finally you may appoint a voluntary administrator. It is important to note that appointing a voluntary administrator will not cancel a winding-up application and the voluntary administrator will most likely need to provide the court with evidence that creditors will receive a better return compared to if the company is immediately wound-up.
Once a wind-up application has been filled in court you may only have approximately 21 – 28 days before the court hearing date (this may vary from court to court). If you do not take action during this time, the court will most likely order for your company to be wound-up. The earlier you seek professional advice the better your chances are of opposing the wind-up application. If you have received a wind-up application and would like assistance, call our professional consultants now on 1800 731 155. Our toll-free line is open, 24/7 including weekends.