Debt & Bankruptcy Lawyers › Winding Up Defence
Winding Up Application Defence Lawyers — Save Your Company. Act Now.
A creditor who is owed more than $4,000 (the statutory minimum debt) can apply to the Supreme Court to wind up your company — forcing it into liquidation. Once a winding up application is filed, the company has a limited time to respond. A debt lawyer advises on the grounds for defending a winding up application — disputing the debt, paying the debt, demonstrating solvency, or entering voluntary administration — and files the court documents urgently to prevent the company being wound up.
⚠ A winding up application is typically returnable before the Supreme Court within 3–4 weeks of filing. If the company does not file a defence, the court may make a winding up order in the company's absence. Get urgent legal advice immediately.
Winding Up Defence Matters We Handle
From statutory demand disputes to solvency affidavits — all winding up defences.
Setting Aside a Statutory Demand
A statutory demand served on a company under s 459E of the Corporations Act 2001 must be responded to within 21 days. The company can apply to the Supreme Court to set aside the demand within that 21-day period on the grounds that there is a genuine dispute about the existence or amount of the debt, or that the company has an offsetting claim. A lawyer files the application to set aside the statutory demand urgently — because once the 21 days expires, the company is deemed insolvent and the creditor can apply to wind up the company without further notice.
Disputing the Debt
Where the debt underlying the winding up application is genuinely disputed — because the company contends it does not owe the amount claimed, or that the amount is incorrect — the company has a complete defence to the winding up application. A court will not wind up a company on the basis of a genuinely disputed debt. A lawyer files the defence, gathers the evidence of the dispute, and appears before the Supreme Court to oppose the winding up order.
Solvency Defence
A company that can pay its debts as and when they fall due (s 95A Corporations Act 2001) is solvent — and a court will not make a winding up order against a solvent company. A lawyer prepares a solvency affidavit (supported by financial statements, cash flow projections, and evidence of available funding) to demonstrate solvency to the court. A solvency defence is particularly effective where the company's inability to pay the specific debt is due to a dispute rather than genuine financial distress.
Paying the Debt — Resolving Before Court
The simplest and most certain way to defeat a winding up application is to pay the underlying debt in full (including the creditor's legal costs) before the application is heard. Where the company has the funds (or can obtain funding) to pay the debt, a lawyer negotiates with the creditor's solicitors to obtain a consent order dismissing the winding up application in exchange for payment. This avoids the reputational damage of a winding up application proceeding to hearing.
Voluntary Administration as an Alternative
Where the company cannot pay the debt but has a viable business that can be restructured, voluntary administration under Part 5.3A of the Corporations Act 2001 is a powerful alternative to winding up. Voluntary administration imposes an automatic moratorium on creditor proceedings — including the winding up application — allowing the administrator to develop a deed of company arrangement (DOCA) to resolve the company's debts. A lawyer advises on the voluntary administration process and manages the appointment of an administrator to stay the winding up proceedings.
Adjournment to Allow Payment
Where the company needs more time to pay the debt or to obtain funding, a lawyer applies to the Supreme Court to adjourn the winding up application. Courts will generally adjourn a winding up application where the company can demonstrate a genuine prospect of paying the debt within a reasonable time — particularly where the company is otherwise solvent and the application is by a single creditor. A lawyer appears in the Supreme Court to seek the adjournment and manages the conditions that the court imposes.
The Legal Framework
Winding up law — Corporations Act 2001 (Cth) Part 5.4 and state Supreme Courts.
Section 459E — the statutory demand
Under s 459E of the Corporations Act 2001, a creditor owed at least $4,000 by a company can serve a statutory demand on the company — requiring payment within 21 days. If the company fails to comply with the demand or to apply to court to set it aside within 21 days, the company is presumed to be insolvent under s 459C. The creditor can then apply to the Supreme Court for a winding up order based on the statutory presumption of insolvency. The 21-day period is strict — it cannot be extended by agreement of the parties and there is no "good excuse" for missing the deadline.
Genuine dispute — s 459H Corporations Act
Section 459H of the Corporations Act 2001 provides that the court must set aside a statutory demand if there is a genuine dispute between the company and the creditor about the existence or amount of the debt. A "genuine dispute" is one that is real and not merely fanciful — the company does not have to prove its case, only that the dispute is arguable. Similarly, s 459H requires the court to set aside the demand if the company has an offsetting claim (a genuine counterclaim or cross-demand) equal to or exceeding the amount of the demand.
The automatic moratorium — voluntary administration
When a voluntary administrator is appointed under s 436A of the Corporations Act 2001, an automatic moratorium takes effect under s 440A — staying all proceedings against the company (including any winding up application) for the duration of the administration. The moratorium gives the administrator time to investigate the company's affairs, develop a DOCA, and convene the second meeting of creditors — typically within 25 business days. A winding up application that is on foot when a voluntary administrator is appointed is stayed by the moratorium and cannot proceed without the leave of the court.
Proof of solvency — rebutting the statutory presumption
Once a company is presumed insolvent (because it failed to comply with a statutory demand within 21 days), the onus shifts to the company to rebut the presumption of insolvency by demonstrating solvency on the balance of probabilities. A company must produce detailed financial evidence — balance sheets, cash flow projections, evidence of available credit facilities, and director guarantees — to satisfy the court that it is solvent. A lawyer coordinates the preparation of the solvency evidence and presents it to the court in a form that meets the legal standard.
Consequences of a winding up order
When the Supreme Court makes a winding up order, a liquidator is appointed to take control of the company's assets. The directors' powers cease immediately. The liquidator investigates the company's affairs, realises the company's assets, and distributes the proceeds to creditors in priority order (employee entitlements first, then secured creditors, then unsecured creditors). Directors who have traded while insolvent, paid related party transactions at undervalue, or preferred certain creditors over others face personal liability to the liquidator for the amounts involved.
ATO winding up applications — a distinct risk
The ATO is Australia's most prolific applicant for winding up orders — applying to wind up companies that have unpaid tax debts (PAYG withholding, GST, superannuation guarantee charge) on a regular basis. The ATO typically serves a statutory demand, waits 21 days for the company to fail to comply, and then files a winding up application. A debt lawyer advises companies that receive ATO statutory demands on the urgency of the response — negotiating a payment arrangement with the ATO before the 21-day deadline expires to avoid the winding up process entirely.
How It Works
One request. Free winding up defence advice.
Tell us whether you have received a statutory demand or a winding up application, the amount of the alleged debt, whether the debt is disputed, and the date of the return hearing. A lawyer will respond urgently.
Submit Your RequestDescribe the winding up threat
Statutory demand or winding up application, the creditor, the amount, whether the debt is disputed, the deadline for response (21 days for statutory demand), and the court return date (for a winding up application).
Matched to a debt lawyer
Matched to a debt lawyer with experience in winding up defences — who appears in the Supreme Court and knows the statutory demand challenge process and the voluntary administration option.
Free urgent consultation
A debt lawyer contacts you urgently — advising on the defence available (dispute, solvency, payment, voluntary administration), the court documents required, and the steps to take immediately to protect the company.