Accordingly, wherever possible a debtor Company will usually try to avoid the appointment of a Liquidator. As such, the taking of any steps towards the appointment of a Liquidator will often be enough to prompt a debtor Company to immediately prioritise payment of the debt.
An application for appointment of a Liquidator to wind up a Company must be made in relation to “an act of insolvency” committed by the debtor Company. The failure by a Company to comply with a Statutory Demand for Payment issued under Section 459E of the Corporations Act will constitute an “act of insolvency” in reliance upon which a subsequent application to wind up the Company in liquidation may be made.
Where a Company owes money to a party (“the Creditor”) the Creditor may serve a Statutory Demand for Payment on the Company. A Statutory Demand for Payment may be issued even when the debt to which it relates is not an existing Judgment debt.