Statutory Demand

Statutory Demand

You may serve a Statutory Demand on a debtor company requiring them to pay you the debt owed.

If the company fails to pay it within 21 days, or fails to secure or compound for it to your reasonable satisfaction, the company is presumed to be insolvent and you can apply to the court to wind up the company under section 459P of the Corporations Act 2001.

The ground most commonly relied on to support a creditor’s winding up application is that the company failed to comply with a Statutory Demand.

The Statutory Demand procedure is a useful method for recovering a debt as a fast-track alternative to litigation but should not be used where either or both of the following applies:

1. The existence or amount of the debt is disputed.
2. The debtor company has an offsetting claim (being a counterclaim, set-off or cross-demand) sufficient to entirely offset or reduce the claimed debt to less than the statutory minimum of $2,000.

If the creditor relies on a debt that is not a judgment debt, the demand must be accompanied by an affidavit (Corporations FCF) under rule 5.2 of the Corporations Rules, you can download it here.

Get in touch for a quote and advice about Statutory Demands!