Previously, we discussed one possible debt recovery remedy against a company: serving that company with a statutory demand. Statutory demands are creatures of the Corporations Act 2001 (Act).
If a statutory demand is served on a company, it has 21 days in which to either pay the debt, the subject of the demand, enter into a payment arrangement or file and serve an application to the Court to have the demand set aside under section 459G of the Act.
But what if the debtor company does nothing after being served with the statutory demand?
What can the creditor then do to recover its debt?
The next step is to make an application to wind up the company on the ground of insolvency and to appoint a liquidator to act on seizing and selling the assets of the company to recover your debt.
An application may be made in the Federal Court or Supreme Court within three (3) months of the company’s non-compliance with the statutory demand. If you fail to file your application within this strict timeframe, then you will need to file and serve a statutory demand all over again. You will need to put on evidence that the statutory demand was in fact served on the company’s registered office. You will also need to put on evidence that at the time of filing the winding up application, the debt remained due and payable, amongst other things. Once the application is filed, you will need to serve it on the company’s registered address and notify the Australian Securities & Investments Commission (ASIC) no later than 10:30am on the next business day.
The Court will set down a hearing date for the application. The written consent of the liquidator should also be filed prior to the hearing.