Unwinding a company wind up order
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What you need to know
In the meantime here’s a summary of the key things you need to know that will get you on track to understanding how to unwind a winding up order:
A winding up application and a winding up order are two different things, representing two different stages of the winding up process.
What is a winding up application?
After a statutory demand has been served and 21 days have passed, if the debtor company has failed to comply with the demand or pay the debt owed, a creditor can file a winding up application with the Court to seek the appointment of a liquidator to the insolvent company. Generally the winding up application will be heard before the Court about 5 to 6 six weeks after filing the application.
What is a winding up order?
A winding up order is made by the Court at a hearing and forces an insolvent company into compulsory liquidation. The order is a direct result of a winding up application being submitted by a creditor, which will leave the insolvent company in the hands of a liquidator to carry out the winding up.
There is a very narrow window of opportunity to take action to stop a winding up application and you’ll need an experienced insolvency lawyer quickly if your business is to have any chance of stopping it from escalating into a court ordered wind up.
While paying off a creditor is the easiest way to stay proceedings, you may still have grounds for negotiation with the creditor, time to move into administration to weigh up your options, to provide evidence that the debt has been disputed and the company is solvent, or to secure an adjournment to buy yourself more time to pay. So, how do you get started? Don’t take the risk and get yourself an insolvency lawyer.
A winding up order is when the court forces an insolvent company into compulsory liquidation. You have a short window from the date of order to respond and to establish a stay of proceedings if the company is in fact solvent (or can quickly be returned to solvency), but this must be pursued quickly (before liquidation costs mount).
When you act swiftly before a winding up order is made you can apply to the court for an adjournment giving you more time to consider your options, raise funds against company assets, to arrange a Deed of Company Arrangement, or to appoint an administrator to manage negotiations with creditors.
The best course of action? Get the support of an insolvency lawyer, fast.