How Can Unsecured Creditors Reinstate a Deregistered Company?

When a company is deregistered, it loses its legal status as an entity and effectively no longer exists. As a result, you cannot start or continue any legal proceedings. But what happens if you have unsecured debts with that company that you need resolved? In this article, we look at two ways an unsecured creditor can apply for the reinstatement of a deregistered company.

Why Reinstate a Deregistered Company?

Generally, a party will want to reinstate a deregistered company to resolve an outstanding legal issue. The issue may be that the:

• deregistered company owes that party money; or
• party has engaged in ongoing legal proceedings with the deregistered company.

As an unsecured creditor, you would have loaned money to the company or provided products or services that the company has not paid for. However, you do not have any company property as security over this debt. As a result, you have no claim to any company assets that you can sell to recover the debt.

You will only be able to recover the debt by reinstating the deregistered company. This is because a deregistered company’s property vests in the Australian Securities and Investments Commission (ASIC). ASIC does not use this property to satisfy the company’s outstanding debts, leaving you potentially out of pocket.

Application for Reinstatement Through ASIC 

One way you can apply for reinstatement is through ASIC.

Criteria for Application

You can apply to ASIC if you meet all of the following criteria:

1. at the time that the company was deregistered, you were a director of the company;
2. you cannot be banned or disqualified as a company officeholder; and
3. you can prove that the company was actively running a business at the time that it was deregistered.

You must also prove that deregistration occurred either:

• because of an oversight made by the company (voluntary deregistration); or
• by error (ASIC-initiated deregistration).

Procedure for Application

You can make your application by following the steps set out on the ASIC website:

1. check that the company’s name is still available;
2. calculate the estimated reinstatement cost using ASIC’s reinstatement calculator;
3. send an online enquiry to ASIC requesting a detailed estimate of fees; and
4. complete the application for reinstatement (received within 28 days from requesting your detailed estimate) and send the application with the required fee to ASIC.

If your application is successful, the reinstatement will occur within 28 days.

Application for Reinstatement Through Courts 

If you do not satisfy the ASIC criteria, or if ASIC refuses your application, you can apply to the court for reinstatement.

Criteria for Application

You can make an application to the court if you:

• are disadvantaged as a result of the company’s deregistration;
• are a member of the company and there are no directors eligible to apply; or
• have made an unsuccessful application for reinstatement to ASIC.

If your application is successful, the court will order ASIC to reinstate the company.

Procedure for Application

When applying to the court for reinstatement of a company, submit your application to either the:

• Federal Court of Australia; or
• Supreme Court in your state or territory.

It will then be up to the court whether they grant the order for reinstatement.

Once granted, you will need to send to ASIC:

• the original court order; and
• a completed ASIC Form 105 – Cover page for office copy of a court order.

ASIC will then reinstate the company’s registration within five business days of receiving the court order.

Key Takeaways

A deregistered company no longer continues to exist as a legal entity. So in order to pursue any claims against the company, you will need to have it reinstated. To do this, you can either apply to ASIC or to a court. Each of these avenues has different requirements and application procedures. If your application is successful, the company will be reinstated as if it were never deregistered.

If you need assistance with your deregistration application, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.