Options Available to Directors Facing a Wind Up Notice
A comprehensive guide to every option available to Australian company directors when facing a wind up notice — from restructuring to negotiation to formal insolvency processes.
Receiving a wind up notice does not mean your business is finished. Multiple pathways exist, and the right option depends on your specific circumstances — the nature of the debt, the financial health of your business, your industry, and how much time remains on the 21-day deadline.
The most important thing is to act quickly and seek specialist advice. The options available to you narrow significantly as the 21-day deadline approaches.
Small Business Restructuring (SBR)
A formal restructuring process under the Corporations Act allowing eligible small businesses to restructure their debts while the directors remain in control of the business.
Eligibility / Requirements
- •Company has liabilities of less than $1 million
- •Tax obligations are up to date (or arrangements in place)
- •Directors have not used SBR or been bankrupt in the past 7 years
- •Employees' entitlements are paid up to date
Advantages
- Directors remain in control of the business
- Can reduce ATO debt by up to 85%
- Moratorium on creditor action during the process
- Faster and cheaper than Voluntary Administration
- Business continues to trade throughout
Voluntary Administration (VA)
An independent administrator is appointed to take control of the company and assess its future. The process provides a moratorium on creditor action and can lead to a Deed of Company Arrangement (DOCA) that allows the business to continue.
Eligibility / Requirements
- •Company is insolvent or likely to become insolvent
- •Directors resolve to appoint an administrator
- •No prior VA in the past 12 months (generally)
Advantages
- Automatic moratorium on all creditor action
- Business can continue to trade
- Can result in DOCA allowing business to continue
- Protects directors from insolvent trading claims during VA
- Independent administrator manages creditor negotiations
Negotiate with Creditors
Direct negotiation with the ATO or other creditors to establish a payment arrangement, dispute the debt, or reach a settlement before court proceedings begin. This is often the fastest and most cost-effective solution when the business has genuine capacity to pay.
Eligibility / Requirements
- •Company has some capacity to pay
- •Creditor is willing to negotiate
- •Debt amount and nature are not genuinely disputed
Advantages
- Fastest resolution if creditor agrees
- No formal insolvency process required
- Preserves business reputation
- Flexible terms possible
- No court involvement
Apply to Set Aside the Demand
Apply to the court to set aside the statutory demand on the grounds of a genuine dispute about the debt, an offsetting claim, or a defect in the demand. This must be done within the 21-day period.
Eligibility / Requirements
- •Genuine dispute about the existence or amount of the debt
- •Offsetting claim against the creditor
- •Defect in the form or service of the demand
- •Other grounds under s459J of the Corporations Act
Advantages
- Can completely resolve the demand if successful
- Buys time while the dispute is resolved
- Protects the company from the insolvency presumption
- Can expose weaknesses in the creditor's claim
Pay the Debt in Full
If your company has the funds available or can access finance, paying the full amount claimed in the demand within 21 days resolves the notice immediately and prevents any further action by the creditor.
Eligibility / Requirements
- •Company has sufficient funds or can access finance
- •Debt amount is not genuinely disputed
- •Payment can be made within 21 days
Advantages
- Immediate and complete resolution
- No formal insolvency process
- Preserves business reputation
- No ongoing obligations or restrictions
Creditors' Voluntary Liquidation (CVL)
If the business is not viable and cannot be saved, a Creditors' Voluntary Liquidation allows for an orderly wind-down of the company. Directors initiate the process before the creditor obtains a court order, which can protect directors from certain personal liability claims.
Eligibility / Requirements
- •Company is insolvent and not viable
- •Directors wish to wind up the company voluntarily
- •Preferable to court-ordered winding up
Advantages
- Orderly and controlled process
- Can protect directors from insolvent trading liability (if acted promptly)
- Creditors treated fairly and in accordance with law
- Avoids stigma of court-ordered winding up
- Directors can cooperate with the process
Not Sure Which Option Is Right for You?
Every situation is different. Our restructuring specialists will assess your specific circumstances and recommend the best path forward — free and confidential.
Don't wait. Every day counts when dealing with a wind up notice.
0489 070 53224/7 Helpline — Available Now