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Statutory Demands And The Winding Up Application
As advised your best course of action is to put in place the process for a winding up application for the debtor company as soon as possible if the amount owed to you is not paid.
In order to commence the winding up process you are first required to serve a Creditors’ Statutory Demand for Payment of Debt on the company. This is where in terms of Section 459C(2)(a) of the Corporations Act a company is presumed to be insolvent if it fails to comply with a Statutory Demand in terms of Section 459(F) of the Act. The procedure can only be utilised where the debtor is a company.
One of the main advantages of proceeding against a debtor in terms of a Statutory Demand is that it is not necessary for a creditor to have obtained a judgment against the debtor. There must however not be a genuine dispute in regard to the debt the subject matter of the Statutory Demand. Accordingly, a creditor who has a claim against a debtor is not obliged to obtain a judgment prior to making a Statutory Demand on the debtor.
The company then has 21 days to pay the outstanding amount or propose to pay the monies by way of an agreement to be reached with the creditor. In the event that the company fails to comply with the demand, you will then be entitled to apply to the Court to have the company wound up.
Please note that the costs of the application will be approximately $5,000.00. However, this is only if the matter proceeds without any opposition or other complicating issue.
We will prepare a Creditors Statutory Demand for Payment of Debt on your behalf in the amounts owing at this stage. An Affidavit in Support is also required to be signed by you.
A further and “in-depth” explanation of the Statutory Demand procedure is set out below.
Should you have any queries, please do not hesitate to Brett Samuel on 8320 2957 or Chris Wray on 8320 2951