The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:
Peter Kelso, solicitor
There are three main types of winding up:
winding up by the court, which is in turn divided into:
winding up in insolvency, where the company must be insolvent, and
winding up by the court on other grounds, where the company may or may not be insolvent
winding up by order of ASIC in specified circumstances, and
voluntary winding up, which is in turn divided into:
members’ voluntary, where the company must be solvent, and
creditors’ voluntary, where it will generally be insolvent
A company may be wound up on the ground that it is insolvent—that is, unable to pay all its debts as they fall due. Insolvency may be established in a number of ways, but the most common is failure to comply with a statutory demand by a creditor for payment of a debt. Such a demand may be set aside by the court on grounds including a dispute about the debt or a counter-claim.
The court can also wind up a company on a number of other grounds, including irregularities in the makeup or conduct of the company, or that it is just and equitable to do so.
The court is given wide powers to stay or terminate the winding up, to order the transfer of books or property to the liquidator and to pursue delinquent or absconding officers. It is also given powers as to the convening of meetings of creditors, the proving of debts and the making of calls on, and distributions of surplus to, contributories (shareholders). These administrative powers are delegated to the liquidator.
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