Why a wind-up notice is the final warning before liquidation

A wind-up notice is the most serious action a company can face from the ATO or another creditor. It means a court date has been set, and the judge will soon decide whether your company goes into liquidation.

How it gets to this stage

A wind-up notice does not happen overnight. It follows a chain of events:

• Debt remains unpaid.
• The creditor obtains a court judgment.
• A statutory demand is issued and expires after 21 days with no payment.
• The creditor applies to the Federal Court or Supreme Court for a wind-up order.

At this point the courts have little sympathy. Directors must show clear evidence that the company is solvent and can meet its obligations immediately.

What are the options?

In some cases a business can apply for voluntary administration before the hearing. This involves appointing a registered administrator to take control and propose a restructuring or repayment plan. However, the courts will only approve this if it is clear that the company can still operate viably and the proposed plan offers the best outcome for creditors.

The bottom line

If your company has received a wind-up notice, time is critical. The best step you can take is to seek professional advice immediately and explore administration or restructuring options before your court date.