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ARTICLE · 03 OCTOBER 2006

War By Any Other Means: Liquidation As A Business Tactic

Clayton Utz
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Courts will frown on a winding up application if they think that it is being made as for an ulterior purpose, such as trying to stifle legitimate litigation.

AustraliaFinance and Banking
Karen O'Flynn
Karen O'Flynn
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Key Point

  • Courts will frown on a winding up application if they think that it is being made as for an ulterior purpose, such as trying to stifle legitimate litigation.

Threatening to have a bad debtor wound up is part of the hurley-burley of business life. But at what point does a winding up application cross the line into unacceptable behaviour?

Two recent decisions by the NSW Supreme Court provide examples of the use of winding up proceedings to achieve something other just the repayment of a debt - and the Court's reaction.

Be careful what you say

The first case involved a longrunning commercial dispute between Evans & Tate Premium Wines, a winemaker, and Australian Beverage Distributors (whose business is self-evident).

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