Winding Up Application: What Happens And How To Stop Them

Article Summary

A winding up application seeks a court order placing a company into liquidation. An unanswered statutory demand commonly creates the presumption of insolvency used to support it. The ordinary demand period is 21 days, and the current statutory minimum is $4,000. A company challenging the demand must apply, file its supporting affidavit and serve both documents within the statutory deadline.

Once proceedings begin, stopping them may require evidence proving solvency, a documented settlement and court orders, a legally available objection, or an administration that the court accepts should continue in creditors’ interests. Payment alone does not guarantee dismissal: another creditor may seek substitution. An adjournment is discretionary, and appointing an administrator is not an automatic shield. Directors must address insolvent trading risks and the possibility that transactions will be challenged if liquidation follows. If a winding up order is made, a liquidator