Burlock v. Keytan Pty Ltd

In the Supreme Court of Queensland, Alan Burlock applied for the winding up of Keytan Pty Ltd due to the company's failure to comply with a statutory demand, which presumed insolvency. The respondent, Keytan Pty Ltd, had not filed an application to set aside the statutory demand, leading to the presumption of insolvency under section 459C(2) of the Corporations Act. The central issue was whether this presumption of insolvency had been rebutted by the company.

The court considered the principles governing the operation of section 459G of the Corporations Act, particularly the distinction between solvency and a surplus of assets. A company could be insolvent yet possess considerable wealth, provided it could convert its assets into cash within a short time to meet its debts as they fell due. The court examined affidavit material and oral evidence from Mr. Gerry Collins and Mr. Simon Wilkins, both chartered accountants. Mr. Collins, an insolvency practitioner, relied on a balance sheet and profit and loss statement to conclude that Keytan Pty Ltd was solvent, with a net asset surplus of $157,422. Mr. Wilkins provided evidence of cash holdings of $244,769 and stated that the company had no other debts apart from development loans.

The court accepted the evidence that Keytan Pty Ltd was solvent, based on the company's ability to pay its debts as they fell due. The balance sheet and valuation indicated a net asset pool of $1.1 million, with the major assets being the land and the capitalised cost of purchasing and development approval. The court was satisfied that Keytan Pty Ltd had discharged its onus in proving solvency.

Accordingly, the court dismissed the application for summary winding up and made no order as to costs, considering the history and the proceedings.