Bx Trade S.r.l. v Coswell S.p.a

Bx Trade S.r.l. (the applicant) sought to wind up Coswell S.p.a. (the respondent) on the grounds of insolvency. The applicant alleged that the respondent had failed to pay a debt of €1,000,000, which had been acknowledged by the respondent in a deed of settlement. The application was heard by Justice Wilson in the Supreme Court of New South Wales.

The primary legal issue before the Court was whether the respondent was unable to pay its debts as they fell due, within the meaning of section 459E of the *Corporations Act 2001* (Cth). This involved determining whether the debt was genuinely disputed on substantial grounds, which would preclude the applicant from relying on a statutory demand to prove insolvency.

Justice Wilson considered the principles governing the determination of whether a debt is genuinely disputed. His Honour noted that a dispute is genuine if it is based on substantial grounds, meaning it is not merely a sham or vexatious. The Court examined the deed of settlement and the surrounding circumstances, including correspondence between the parties, to ascertain whether the respondent had raised substantial grounds to dispute the debt at the time the statutory demand was served. The Court found that the respondent had not demonstrated a genuine dispute on substantial grounds, as the deed of settlement clearly acknowledged the debt and provided a mechanism for its repayment.

The Court ordered that the respondent be wound up and that the applicant have its costs of the application.