In the matter of GHS Safety Products Pty Ltd

GHS Safety Products Pty Ltd was the subject of a winding up application by a creditor, following the company's failure to comply with a statutory demand. The case was heard in the Federal Circuit Court of Australia. The central issue was whether the presumption of insolvency arising from the company’s failure to comply with the statutory demand could be rebutted by evidence suggesting the company's financial position was not as dire as initially presumed.

The court considered whether the company had sufficient cash resources and future income to satisfy its debts as they fell due. Notably, the company deposited a barely sufficient cash amount into the bank before the hearing. Additionally, there were credits and debts to the Australian Taxation Office that were contingent on the outcome of a favourable objection ruling. The company also provided evidence of an imminent demand on a guarantee it had given, indicating potential future liabilities. Despite the plaintiff’s debt being paid after the judgment, the court had to determine whether these factors sufficiently rebutted the presumption of insolvency.

The court concluded that the company had not sufficiently rebutted the presumption of insolvency. The evidence did not conclusively demonstrate that the company could meet its financial obligations as they became due. Consequently, the court made a winding up order against GHS Safety Products Pty Ltd.