Winding-up applications: defending one, or winding up a debtor company

Q: Can the court adjourn the application to let us restructure?

Yes. If the company enters voluntary administration, the court must adjourn if satisfied that continuing the administration better serves creditors (s 440A(2)). That needs persuasive evidence of a better return, not mere hope. Otherwise the court has a general discretion to adjourn (s 467), within the six-month limit (s 459R).

A winding-up application asks the Federal Court or the Supreme Court of Queensland to put a company into liquidation. A company that ignores it is usually wound up at the first hearing. One that acts quickly can pay, prove solvency or seek an adjournment to restructure.

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Key points

Any creditor may apply to wind up an insolvent company (s 459P), and an unpaid statutory demand creates a presumption of insolvency (s 459C).
The application is served, notified to ASIC and published on ASIC’s published notices website.
The company must prove solvency, and needs leave to reargue the demand (s 459S).
The court must adjourn if the company is in administration and that serves creditors better (s 440A(2)).
The application must be determined within six months (s 459R); the applicant’s costs usually come from the company’s assets.

General guidance only – not legal advice. Please obtain independent legal advice before relying on any of this information. The law is stated as at September 2026.

What is a winding-up application, and when should a creditor bring one?

A winding-up application is a court proceeding under Part 5.4 of the Corporations Act 2001 (Cth). The court may wind up an insolvent company (s 459A) on the application of the company, a creditor, a liquidator or ASIC (s 459P).

The court must presume insolvency if, in the three months before the application, the company (s 459C(2)):

failed to comply with a creditor’s statutory demand
had execution on a judgment returned unsatisfied, or
had a receiver or other controller appointed under a circulating security interest.

Other grounds, such as just and equitable winding up in shareholder disputes, fall under s 461.

For creditors. Winding up recovers nothing directly: a liquidator takes the assets and pays creditors in statutory order. It suits a debtor that can pay but will not. Against an empty company, judgment and enforcement may serve better.

How does a winding-up application proceed?

In Brisbane, applications are filed in the Federal Court or the Supreme Court of Queensland under harmonised Corporations rules:

Filing. An affidavit verifies the debt and any non-compliance with the demand (s 459Q).
Service and ASIC. The company is served within 14 days of filing and at least five days before the hearing. ASIC is notified the next business day (s 465A).
Publication. Notice appears on ASIC’s published notices website at least three days after service and at least seven days before the hearing (r 5.6). Financiers and suppliers monitor it closely.
Liquidator’s consent. A registered liquidator’s consent is filed and served at least a day before the hearing (r 5.5).

The hearing. The court checks that each step is proved and the company is insolvent. If the company does not appear, the order is usually made. The court may adjourn, dismiss or make interim orders (s 467), but must decide within six months (s 459R).

How can a company defend a winding-up application?

Grounds of opposition and an affidavit must be filed and served at least three days before the hearing (s 465C; r 2.9).

Pay the debt. Payment removes the applicant’s standing, but another creditor can be substituted (s 465B; r 5.10). If the company is wound up anyway, the payment may be an unfair preference.

Prove solvency. The court expects the fullest and best evidence of solvency (s 459C(3)). That means verified accounts, cash-flow forecasts and confirmed finance, not unaudited figures: Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728. Grounds available against the demand need leave, given only if material to solvency (s 459S).

Adjourn for administration. If the company enters voluntary administration, the court must adjourn if that better serves creditors (s 440A(2)). That needs persuasive evidence of a better return, not optimism: Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456.

Challenge the debt. Pressing a genuinely disputed debt through a winding-up application is an abuse of process, and the court can dismiss it with costs.

What happens if a winding-up order is made?

Once the order is made:

directors’ powers cease (s 471A) and the liquidator takes custody of all property (s 474)
claims and enforcement against the company are stayed without leave (s 471B), though secured creditors may still enforce (s 471C)
later dispositions of company property are void unless the court orders otherwise (s 468)
the filing date becomes the relation-back day (s 91) for voidable transactions.

Directors must give the liquidator a report on company activities and property within 10 business days (s 475) and assist its investigation (s 530A). The investigation often leads to liquidator claims, including for insolvent trading. The applicant’s taxed costs are paid ahead of unsecured creditors (ss 466 and 556).

What should you do if your company has been served with a winding-up application?

Diarise the hearing date. Publication can follow three days after service.
Do not ignore it; an order usually follows if no one appears.
Get advice immediately. Grounds of opposition are due three days before the hearing.
Assess solvency honestly and gather the financial evidence.
If insolvent, consider voluntary administration before the hearing.
Talk to the applicant about terms or an agreed adjournment.
If you pay, understand the preference risk. Payment into court may suit a disputed debt.

How Taylor David can help

We act for companies, directors, creditors and insolvency practitioners, and can:

assess prospects and prepare the grounds of opposition and solvency evidence
negotiate adjournments and payment terms with the applicant
coordinate an administration or restructuring with registered liquidators
for creditors, prepare and run winding-up and substitution applications
advise directors on exposure once a liquidator is appointed.

This work sits within our insolvency and litigation practices.

Frequently asked questions

Questions we are often asked

How long do I have after being served with a winding-up application?

Very little. The rules require only five days between service and the hearing, although a few weeks is usual. Notice must be published at least seven days before the hearing. Your grounds of opposition and affidavit are due three days before it. Solvency evidence takes much longer, so start immediately.

Can I stop the winding up by paying the debt?

Usually, yes. Once paid, the applicant cannot obtain an order, though it may seek costs. Another creditor can apply to be substituted, so check for other overdue debts. If the company is wound up on an application filed within six months, the payment may be recovered as an unfair preference.

Will my bank find out about the application?

Assume so. The notice is published on ASIC’s published notices website, which is free to search. Financiers, credit bureaus, trade credit insurers and major suppliers monitor it. Banks may review or freeze facilities, and suppliers may move to cash on delivery. Early, advised contact with your financier is usually wiser.

Can the court adjourn the application to let us restructure?

Yes. If the company enters voluntary administration (in limited circumstances), the court must adjourn if satisfied that continuing the administration better serves creditors (s 440A(2)). That needs persuasive evidence of a better return, not mere hope. Otherwise the court has a general discretion to adjourn (s 467), within the six-month limit (s 459R).

What happens to my other creditors if one creditor winds us up?

The winding up is collective: all unsecured creditors, including the applicant, share the liquidator’s recoveries in statutory order. The applicant’s costs are paid ahead of them, and employees have priority for wages and superannuation. Secured creditors can still enforce. The liquidator can also claw back pre-filing payments to some creditors.

General guidance only – not legal advice. Please obtain independent legal advice before relying on any of this information. The law is stated as at September 2026.

Related expertise

Insolvency →Litigation →Reconstruction & Turnaround →

The earlier we talk, the more options you have.

To discuss your situation in confidence, call Scott D. Taylor on +61 7 3229 9800, email [email protected] or send us an enquiry online.

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