A claim of solvency needs reliable evidence covering the company’s whole payment position, not just a current balance or the applicant’s invoice.
Corporate Recovery Partners
01 / 06
A bank screenshot does not explain all due obligations
A company facing a winding-up application has money in the bank and expects to defend the case by showing a screenshot. The accountant points out that a large tax liability and several supplier balances fall due shortly. The company may have a response, but it needs evidence that explains the complete position and the reliability of future resources.
Give the lawyer the application, demand history and current orders. Ask what issues must be answered and what financial evidence is required in the particular case.
The Federal Court’s guide refers to evidence of solvency in responding to the presumption arising from an unsatisfied demand. A confident assertion is not a substitute for the material needed to support it.
Prepare aged creditors, tax accounts, loan balances, employee commitments and disputed claims. Check completeness against statements and recent transactions. Identify contingent obligations and explain how they are treated.
Do not omit a creditor because management expects to negotiate later. Show accepted arrangements and their terms, distinguishing them from requests still awaiting a response.
Provide bank records, receivable evidence, facility documents and any committed support. Assess collectability, timing, restrictions and conditions. Explain asset valuations and realistic realisation periods where relevant.
Avoid counting the same resource twice, such as an invoice both as cash already received and as a future collection. Show the effect of material delays or disputed receipts.
Work with the accountant and lawyer to prepare the required statements and affidavits accurately. Ensure the person giving evidence understands the records and identifies assumptions.
Update material changes before the hearing and comply with filing and service directions. Evidence that was accurate when drafted can become misleading if a major receipt fails and nobody corrects the position.
