Served with a winding-up application? The hearing date is your deadline

If a company has been served with a winding-up application, the statutory demand stage has usually come and gone. That’s hard to hear, but it isn’t the same as the company being finished. Until the court makes a winding-up order, the directors still run the business, and the debt that triggered the application can still be paid. What changes is the pace. You now have a fixed hearing date, and everything has to happen before it.

How did we get here?

Most applications follow a familiar path:

1. A creditor serves a statutory demand for a debt of at least $4,000.
2. The company doesn’t pay, settle or apply to set it aside within 21 days.
3. The company is presumed insolvent.
4. Within three months, the creditor files an application asking the court to wind the company up, relying on that presumption.

The ATO is one of the creditors that uses this path. Its guidance describes wind-up action for companies that have failed to pay their debts where a suitable payment plan couldn’t be negotiated.

What happens at the hearing?

The Federal Court describes a largely procedural test. The court checks that the formal requirements are met, including that the company is presumed insolvent and that the presumption hasn’t been rebutted. If it’s satisfied, it usually makes the order and appoints a liquidator.

Rebutting the presumption means showing the company is actually solvent — that it can pay its debts as and when they fall due. That’s a matter for evidence and lawyers. For most owners, the more practical question is: can the debt be paid before the hearing?

Why isn’t paying the applicant always enough?

Because other creditors can step in. When one creditor’s debt is paid, another creditor who is also owed money can ask to be substituted as applicant and keep the case going. A company that has been sliding for months often has several overdue creditors, and a winding-up application is public, so they may well notice.

That’s why a rescue plan at this stage usually looks at the whole ledger:

Creditor type	Why it matters now
Applicant creditor	Must be paid or settled, plus their legal costs
ATO	Frequently owed money and able to step in as a creditor
Other creditors with demands	Can seek substitution if the applicant is paid
Suppliers you need to keep trading	Losing them after the hearing can sink the business anyway

A debt consolidation loan that pays several of those at once can be the difference between a hearing that’s dismissed and one where the company is wound up by someone else’s application.

If you’d like a lender’s view on whether that can be done before your hearing, send us the details here. It doesn’t involve a credit check.

Which funding routes are realistic this late?

Time rules out some options, so the practical shortlist is narrow:

• Caveat loans and second mortgages over property owned by the company, a director or a related party. Property-secured lending runs from $20,000 to $5,000,000, and a caveat loan usually involves less paperwork than a registered mortgage. See caveat loans for deadlines.
• Unsecured cash-flow funding of around $5,000 to $500,000 where the business is trading and its bank statements support repayments.
• Settlement funding where the applicant will accept a discounted lump sum to withdraw, covered on our creditor settlement page.

A lender will look hard at what the business looks like after the payout. If clearing these debts leaves a company that’s profitable and current with the ATO, there’s a story to fund. If it only buys a month, a lender will say so — and that’s useful to know before you spend money on it.

An illustrative example

Illustrative only. A Melbourne transport company is served with a winding-up application by a fuel supplier after an unmet statutory demand. The company also owes the ATO for two quarters of GST. The two directors own a commercial yard with equity. A loan secured on the yard pays the fuel supplier’s debt and costs and clears the GST, so there’s no creditor left to seek substitution. The application is dismissed and the company keeps its trucks on the road.

What should I do in the next 48 hours?

• Diarise the hearing date. Use the debt letter triage tool to see how many days remain.
• Get a lawyer on the record so you can talk to the applicant’s solicitors and the court if needed.
• List every overdue creditor, including the ATO. Our which-debt-first sorter helps.
• Pull together security and statements: property details, six months of bank statements, the latest BAS and management accounts.
• Talk to a funder and an adviser in parallel. Waiting for one before calling the other costs days you don’t have.

If the conversation turns to liquidation, read how to avoid liquidation first. It lays out the routes that keep you in charge.

Is it too late for us to help?

Sometimes, honestly, it is. But more often than people think, a company served with an application is still a business with customers, staff and assets — just with the wrong debts in the wrong order. Funding can put that order right.

Tell us about the hearing date, the creditors and what the business owns. The enquiry takes a minute and doesn’t involve a credit check. Nobody sends your file to a crowd of lenders; one person looks at it and calls you. Accurate figures and dates help us tell you quickly whether a rescue is possible before the court date.

Ask whether we can fund you out before the hearing →