Commonwealth Numbered Acts

CORPORATE LAW REFORM ACT 1992 No. 210 of 1992 - SECT 57

57. The respective headings to Part 5.4 of the Corporations Law, and to
Division 1 of that Part, are repealed and the following Part and heading are
substituted:

"PART 5.4 - WINDING UP IN INSOLVENCY

"Division 1 - When company to be wound up in insolvency Order that insolvent
company be wound up in insolvency

"459A. On an application under section 459P, the Court may order that an
insolvent company be wound up in insolvency. Order made on application under
section 260, 462 or 464

"459B. Where, on an application under section 260, 462 or 464, the Court is
satisfied that the company is insolvent, the Court may order that the company
be wound up in insolvency. Presumptions to be made in certain proceedings

"459C.(1) This section has effect for the purposes of:

   (a)  an application under section 260, 459P, 462 or 464; or

   (b)  an application for leave to make an application under section 459P.

"(2) The Court must presume that the company is insolvent if, during or after
the 3 months ending on the day when the application was made:

   (a)  the company failed (as defined by section 459F) to comply with a
        statutory demand; or

   (b)  execution or other process issued on a judgment, decree or order of an
        Australian court in favour of a creditor of the company was returned
        wholly or partly unsatisfied; or

   (c)  a receiver, or receiver and manager, of property of the company was
        appointed under a power contained in an instrument relating to a
        floating charge on such property; or

   (d)  an order was made for the appointment of such a receiver, or receiver
        and manager, for the purpose of enforcing such a charge; or

   (e)  a person entered into possession, or assumed control, of such property
        for such a purpose; or

   (f)  a person was appointed so to enter into possession or assume control
        (whether as agent for the chargee or for the company).

"(3) A presumption for which this section provides operates except so far as
the contrary is proved for the purposes of the application. Contingent or
prospective liability relevant to whether company solvent

"459D.(1) In determining, for the purposes of an application of a kind
referred to in subsection 459C(1), whether or not the company is solvent, the
Court may take into account a contingent or prospective liability of the
company.

"(2) Subsection (1) does not limit the matters that may be taken into account
in determining, for a particular purpose, whether or not a company is solvent.

"Division 2 - Statutory demand Creditor may serve statutory demand on company

"459E.(1) A person may serve on a company a demand relating to:

   (a)  a single debt that the company owes to the person, that is due and
        payable and whose amount is at least the statutory minimum; or

   (b)  2 or more debts that the company owes to the person, that are due and
        payable and whose amounts total at least the statutory minimum.

"(2) The demand:

   (a)  if it relates to a single debt - must specify the debt and its amount;
        and

   (b)  if it relates to 2 or more debts - must specify the total of the
        amounts of the debts; and

   (c)  must require the company to pay the amount of the debt, or the total
        of the amounts of the debts, or to secure or compound for that amount
        or total to the creditor's reasonable satisfaction, within 21 days
        after the demand is served on the company; and

   (d)  must be in writing; and

   (e)  must be in the prescribed form (if any); and

   (f)  must be signed by or on behalf of the creditor.

"(3) Unless the debt, or each of the debts, is a judgment debt, the demand
must be accompanied by an affidavit that:

   (a)  verifies that the debt, or the total of the amounts of the debts, is
        due and payable by the company; and

   (b)  complies with the rules.

"(4) A person may make a demand under this section relating to a debt even if
the debt is owed to the person as assignee. When company taken to fail to
comply with statutory demand

"459F.(1) If, as at the end of the period for compliance with a statutory
demand, the demand is still in effect and the company has not complied with
it, the company is taken to fail to comply with the demand at the end of that
period.

"(2) The period for compliance with a statutory demand is:

   (a)  if the company applies in accordance with section 459G for an order
        setting aside the demand:

        (i)    if, on hearing the application under section 459G, or on an
               application by the company under this paragraph, the Court
               makes an order that extends the period for compliance with the
               demand - the period specified in the order, or in the last such
               order, as the case requires, as the period for such compliance;
               or

        (ii)   otherwise - the period beginning on the day when the demand is
               served and ending 7 days after the application under section
               459G is finally determined or otherwise disposed of; or

   (b)  otherwise - 21 days after the demand is served.

"Division 3 - Application to set aside statutory demand Company may apply

"459G.(1) A company may apply to the Court for an order setting aside a
statutory demand served on the company.

"(2) An application may only be made within 21 days after the demand is so
served.

"(3) An application is made in accordance with this section only if, within
those 21 days:

   (a)  an affidavit supporting the application is filed with the Court; and

   (b)  a copy of the application, and a copy of the supporting affidavit, are
        served on the person who served the demand on the company.
        Determination of application where there is a dispute or offsetting
        claim

"459H.(1) This section applies where, on an application under section 459G,
the Court is satisfied of either or both of the following:

   (a)  that there is a genuine dispute between the company and the respondent
        about the existence or amount of a debt to which the demand relates;

   (b)  that the company has an offsetting claim.

"(2) The Court must calculate the substantiated amount of the demand in
accordance with the formula:
Admitted total - Offsetting total where:
'Admitted total' means:

   (a)  the admitted amount of the debt; or

   (b)  the total of the respective admitted amounts of the debts; as the case
        requires, to which the demand relates;
'Offsetting total' means:

   (a)  if the Court is satisfied that the company has only one offsetting
        claim - the amount of that claim; or

   (b)  if the Court is satisfied that the company has 2 or more offsetting
        claims - the total of the amounts of those claims; or

   (c)  otherwise - a nil amount.

"(3) If the substantiated amount is less than the statutory minimum, the Court
must, by order, set aside the demand.

"(4) If the substantiated amount is at least as great as the statutory
minimum, the Court may make an order:

   (a)  varying the demand as specified in the order; and

   (b)  declaring the demand to have had effect, as so varied, as from when
        the demand was served on the company.

"(5) In this section:
'admitted amount', in relation to a debt, means:

   (a)  if the Court is satisfied that there is a genuine dispute between the
        company and the respondent about the existence of the debt - a nil
        amount; or

   (b)  if the Court is satisfied that there is a genuine dispute between the
        company and the respondent about the amount of the debt - so much of
        that amount as the Court is satisfied is not the subject of such a
        dispute; or

   (c)  otherwise - the amount of the debt;
'offsetting claim' means a genuine claim that the company has against the
respondent by way of counterclaim, set-off or cross-demand (even if it does
not arise out of the same transaction or circumstances as a debt to which the
demand relates);
'respondent' means the person who served the demand on the company.

"(6) This section has effect subject to section 459J. Setting aside demand on
other grounds

"459J.(1) On an application under section 459G, the Court may by order set
aside the demand if it is satisfied that:

   (a)  because of a defect in the demand, substantial injustice will be
        caused unless the demand is set aside; or

   (b)  there is some other reason why the demand should be set aside.

"(2) Except as provided in subsection (1), the Court must not set aside a
statutory demand merely because of a defect. Effect of order setting aside
demand

"459K. A statutory demand has no effect while there is in force under section
459H or 459J an order setting aside the demand. Dismissal of application

"459L. Unless the Court makes, on an application under section 459J, an order
under section 459H or 459J, the Court is to dismiss the application. Order
subject to conditions

"459M. An order under section 459H or 459J may be made subject to conditions.
Costs where company successful

"459N. Where, on an application under section 459G, the Court sets aside the
demand, it may order the person who served the demand to pay the company's
costs in relation to the application.

"Division 4 - Application for order to wind up company
in insolvency Who may apply for order under section 459A

"459P.(1) Any one or more of the following may apply to the Court for a
company to be wound up in insolvency:

   (a)  the company;

   (b)  a creditor (even if the creditor is a secured creditor or is only a
        contingent or prospective creditor);

   (c)  a contributory;

   (d)  a director;

   (e)  a liquidator or provisional liquidator of the company;

   (f)  the Commission;

   (g)  a prescribed agency.

"(2) An application by any of the following, or by persons including any of
the following, may only be made with the leave of the Court:

   (a)  a person who is a creditor only because of a contingent or prospective
        debt;

   (b)  a contributory;

   (c)  a director;

   (d)  the Commission.

"(3) The Court may give leave if satisfied that there is aprima facie case
that the company is insolvent, but not otherwise.

"(4) The Court may give leave subject to conditions.

"(5) Except as permitted by this section, a person cannot apply for a company
to be wound up in insolvency. Application relying on failure to comply with
statutory demand

"459Q. If an application for a company to be wound up in insolvency relies on
a failure by the company to comply with a statutory demand, the application:

   (a)  must set out particulars of service of the demand on the company and
        of the failure to comply with the demand; and

   (b)  must have attached to it:

        (i)    a copy of the demand; and

        (ii)   if the demand has been varied by an order under subsection
               459H(4) - a copy of the order; and

   (c)  unless the debt, or each of the debts, to which the demand relates is
        a judgment debt - must be accompanied by an affidavit that:

        (i)    verifies that the debt, or the total of the amounts of the
               debts, is due and payable by the company; and

        (ii)   complies with the rules. Period within which application must
               be determined

"459R.(1) An application for a company to be wound up in insolvency is to be
determined within 6 months after it is made.

"(2) The Court may by order extend the period within which an application must
be determined, but only if:

   (a)  the Court is satisfied that special circumstances justify the
        extension; and

   (b)  the order is made within that period as prescribed by subsection (1),
        or as last extended under this subsection, as the case requires.

"(3) An application is, because of this subsection, dismissed if it is not
determined as required by this section.

"(4) An order under subsection (2) may be made subject to conditions. Company
may not oppose application on certain grounds

"459S.(1) In so far as an application for a company to be wound up in
insolvency relies on a failure by the company to comply with a statutory
demand, the company may not, without the leave of the Court, oppose the
application on a ground:

   (a)  that the company relied on for the purposes of an application by it
        for the demand to be set aside; or

   (b)  that the company could have so relied on, but did not so rely on
        (whether it made such an application or not).

"(2) The Court is not to grant leave under subsection (1) unless it is
satisfied that the ground is material to proving that the company is solvent.
Application to wind up joint debtors in insolvency

"459T.(1) A single application may be made for 2 or more companies to be wound
up in insolvency if they are joint debtors, whether partners or not.

"(2) On such an application, the Court may order that one or more of the
companies be wound up in insolvency, even if it dismisses the application in
so far as it relates to another or others.

"PART 5.4A - WINDING UP BY THE COURT ON OTHER GROUNDS".