How to apply for a winding-up order in court
To wind up an Australian company in insolvency, the creditor usually serves a statutory demand under section 459E of the Corporations Act 2001 (Cth), and if unpaid within 21 days, files an originating process in the Federal Court or State/Territory Supreme Court under section 459P relying on the presumption of insolvency in section 459C.
The framework
Corporations Act 2001 (Cth) — sections 459A, 459C, 459E, 459P, 461, 465A, 467, 471A, 588G; Federal Court (Corporations) Rules 2000; Supreme Court (Corporations) Rules (each State/Territory); Insolvency Practice Schedule (Corporations).
The process
Identify the grounds
Grounds for winding up in insolvency (section 459A) or other grounds (section 461) — just and equitable, oppression, suspension of business, directors acting unfairly, or ASIC application.
Serve a statutory demand
For creditor applications, serve a statutory demand under section 459E. The demand must be for a debt of at least $4,000, due and payable, verified by affidavit if not a judgment debt.
21-day period
The debtor has 21 days to pay, compound, or apply under section 459G to set aside the demand. Non-compliance within 21 days creates a presumption of insolvency under section 459C.
Draft originating process
Prepare an originating process under the Corporations Rules (Form 2), supporting affidavit (Form 7), and affidavit of statutory demand compliance.
Identify the liquidator
Consent in writing from a registered liquidator (Form 8) is required. Liquidator independence must be confirmed.
File and serve
File in the Federal Court or the Supreme Court of the State/Territory of the company's registered office. Serve the company at its registered office at least five business days before the hearing under the Rules.
Publish notice
Publish notice of the application in the prescribed manner (ASIC Published Notices website) under Rule 5.6 of the Corporations Rules, not less than 3 business days before the hearing.
Hearing
At hearing the court considers insolvency, procedural compliance, and opposition grounds. The company may seek a stay or adjournment under section 467B to demonstrate solvency.
Winding-up order and liquidator appointment
The court makes a winding-up order under section 459A, appoints a liquidator, and makes costs orders. Section 471A restricts officer dealings after appointment.
Post-appointment and creditor rights
The liquidator administers the estate under Part 5.6 and the Insolvency Practice Schedule. Creditors prove debts, meetings are held, and distributions made in priority under section 556.
Forms and templates
- Statutory Demand (Form 509H)
- Originating Process (Form 2) — Corporations Rules
Common mistakes
- Issuing a statutory demand for a disputed debt, inviting a section 459G set-aside
- Omitting the supporting affidavit where required
- Failing to publish the application notice under Rule 5.6
- Not obtaining a compliant liquidator consent under Form 8
- Overlooking directors' insolvent trading defences under section 588G
Get this process right with Quillio
Quillio can draft a compliant statutory demand and supporting affidavit, prepare the originating process and affidavits, and produce a Rule 5.6 publication pack. See /practice-areas/commercial-lawyers.
General information only, not legal advice. Winding-up is a significant step and can be set aside or attract indemnity costs. Engage an insolvency lawyer.
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