A wind-up application can feel like the end of the road, but it is often a legal step in a process — not the final outcome. Here’s what directors should understand about timelines, evidence and the decisions that shape what happens next.
Few documents escalate pressure on a director faster than a wind-up application. The language is formal, the consequences appear immediate, and many assume the company has already lost control.
In reality, the application itself is not the event that determines the outcome. What matters is what has — and hasn’t — happened in the weeks beforehand.
Most wind-up proceedings start with a statutory demand. If that demand is not dealt with correctly within 21 days, the law presumes insolvency. From that point, the creditor is no longer arguing the company can’t pay — the court assumes it. The application that follows is largely built on that presumption.
This is why many directors feel blindsided. By the time the court documents arrive, the critical decision window has often already passed.
However, even at this stage, options can still exist. The question becomes whether the company can demonstrate one of three things: that the debt is genuinely disputed, that there was a defect in the demand, or that the company is solvent despite appearances. Each of these requires evidence, not explanation.
One of the most common mistakes we see is directors responding informally. They send emails, propose payment arrangements, or prepare their own statements describing what happened. Unfortunately, courts don’t assess situations on intentions or conversations. They assess admissible evidence.
Affidavits, for example, are not simply written accounts. They must address specific legal requirements, attach proper documentation and be filed within strict deadlines. An affidavit that is incomplete, late, or based on unsupported assertions can remove a viable defence entirely, even where the underlying business is capable of recovery.
Timing is equally critical. Once a wind-up hearing is scheduled, negotiations become harder. Creditors gain leverage because the court date itself becomes pressure. At that point, even cooperative discussions can stall, as both sides focus on legal positioning rather than commercial resolution.
The directors who navigate these situations best are not necessarily those with the strongest arguments. They are the ones who act early and structure their response properly. That means quickly assessing whether the debt is contestable, understanding the company’s actual solvency position, and deciding whether the matter should be defended, settled, or incorporated into a broader restructuring strategy.
At Tax Negotiators, we help directors step back from the immediate panic and focus on the mechanics of the process. What deadlines apply. What evidence the court will rely on. And which actions preserve options instead of narrowing them.
A wind-up application feels final, but legally it is a step in a sequence. The outcome is usually decided not by the document itself, but by the accuracy and timing of the response.
Handled correctly, some companies stabilise, negotiate, or restructure. Handled reactively, the court simply follows the presumption already created.
When the stakes involve both the business and the director’s position, process matters just as much as the debt.
