Is your business at risk at the hands of another business in financial distress? Don’t sit on the sidelines and wait for them to go under – by that point it could be too late. If you are owed money and are getting nowhere with reasonable requests for payment, you may choose to petition for the company to be wound up in order to recover what’s owed. With the support of a savvy legal team you can speed up the recovery of funds that could be critical to your continued operation.
Company Wind Up
Recover your unpaid debt
Petition for a company wind up
It can be difficult to come to terms with pursuing a course of action that brings another down, however it can be critical to your own survival. Quite often the demise of the debtor is inevitable and waiting for nature to take its course can leave you in a state of financial distress as a result.
Liquidation often provides the best outcome for all parties impacted by an insolvent company. Our insolvency lawyers have a wealth of experience in managing multiple stakeholders, frequently with contrasting views and objectives. We break through these difficulties to deliver effective strategies and results.
Spotlight on the Law
What You Need to Know
Before you speak to an expert, here’s a few important things you need to know about winding up a company as a creditor:
There are clear steps that must be taken before you can wind up a company that owes you money.
Before you can wind up a company that owes you money, it is important to understand the steps involved. While a five step process may seem manageable, one wrong move could mean your action is thrown out and you’ll soon find yourself back at square one.
- Step 1: Consider submitting a letter of demand prior to any taking any further action. This is optional but demonstrates you have given the reasonable warning before pursuing a winding up process.
- Step 2: For debts exceeding $2000, proceed by serving the statutory demand. There are two ways to submit a statutory demand. 1) have a judgment obtained or 2) provide an affidavit in support to show there is no genuine dispute that the debt is due and owing.
- Step 3: If the debtor company fails to meet the demand or does not apply to set it aside within 21 days of service, then the company is deemed insolvent and you can proceed to wind up the company with the assistance of your insolvency lawyer.
Note: you should only use a statutory demand when necessary.
Seeking advice from an insolvency lawyer can mean each step is completed accurately and improves your chance of successfully winding up the company that owes you money.
Serving a letter of demand before commencing wind up proceedings will help your case.
A letter of demand is quite simply that; a formal notice to a debtor that clearly identifies a debt, a creditor and provides clear messaging that the debt is to be paid and the requirements around when and how it is to be paid. It also will flush out whether there is a genuine dispute to the debt.
Issuing a letter of demand will demonstrate you are proceeding with reasonable force to obtain monies owed to you before proceeding with more formal proceedings. This will stand you in good stead in the eyes of the law when it comes to judging whether you have grounds to wind up a company that owes you money.
A diligent insolvency lawyer can support you in drafting an airtight letter of demand that will stand up in court.
Use a statement of claim to start court proceedings for debt recovery
Where you do not immediately wish to pursue winding up action against a debtor, or if there is a genuine dispute about the debt, court proceedings may be necessary. A statement of claim is used to start court proceedings, which must be properly served on the debtor. The statement of claim needs to be carefully formulated and filed with the court to enable you to move ahead with court proceedings.
You will need the support of a dedicated lawyer to supporting drafting of an airtight statement of claim and to ensure it is lodged correctly with the court.
Serving a statutory demand against a debtor company will establish whether a company is insolvent, at which point you can submit an application to wind up the company
Winding up proceedings can begin based on an unsatisfied statutory demand. A statutory demand is a creditor’s formal, written request requiring a company to pay a debt within 21 days of service, otherwise the consequences are serious.
Failure to meet a statutory demand will trigger an insolvency event allowing a creditor to file winding up proceedings with the Court to seek the appointment of a liquidator to the debtor company.