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Winding Up Applications and the Extension of Time

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Section 459R(1) of the Corporations Act 2001 (Cth) (“the Act”) requires that an application be filed to wind up a company, and for it to be determined within six months of filing. Should that six month period expire, the application can be dismissed without the orders sought being made.

However, there is provision for the six month period to be extended under section 459R(2) of the Act, if the applicant can satisfy the Court that special circumstances exist.

These time limits compare unfavourably with the Bankruptcy Act 1966 (Cth), which allows 12 months for an application for a sequestration order to be determined and the ability to extend the application for up to a further 12 months.

In the New South Wales Supreme Court, His Honour Justice Hamilton has said in relation to an application to extend time under section 459R of the Act:
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I don’t owe them money: invoking bankruptcy jurisdiction to ‘look behind a judgment’

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

It is an unfortunate predicament for bankruptcy trustees that they become a new target for the litigious bankrupt. Bankrupts hell-bent on maintaining the original dispute with the petitioning creditor often request bankruptcy courts to ‘look behind the judgment’, an exercise in which a bankruptcy court can determine whether a debt is really owing in substance, notwithstanding that there may be a pre-existing court order.

Such is the saga of the Bankrupt Estate of Shaw, the history of which was set out by Snaden J in Shaw v The Official Trustee in Bankruptcy [2019] FCA 1574 (“the Review Application”), an application by the bankrupt seeking to review the trustee’s decision to admit the petitioning creditors’ debt. The decision in the Review Application has recently been affirmed on appeal in Shaw v The Official Trustee in Bankruptcy [2020] FCAFC 142 (“the Review Appeal”).
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