auDA said Capital had failed to pay costs awarded against it to date in a long-running court battle with the domain administrator as per an initial agreement, Federal Court order and statutory demand.
Consequently auDA asked the court on 21 March to declare Capital insolvent under the Corporations Act. The application is scheduled for hearing on 28 April.
Capital had initially commenced proceedings against auDA in the Federal Court in April 2004, claiming the administrator had no right to seek "certain information" from Capital under its registrar agreement.
However, auDA successfully defended the initial action and a subsequent appeal to the Full Federal Court. Capital is now seeking special leave to appeal that decision to the High Court of Australia.
There is a potential way out for Capital: auDA stated that accreditation could be reinstated in future if the company demonstrated it's solvency "to auDA's reasonable satisfaction".
The domain administrator said it would temporarily take over registrar responsibilities for all of Capital's .au registrants. Those registrants would soon be contacted by auDA with information about the action taken and their rights and obligations.