A statutory demand can arise when a company fails to pay the debt owed to a creditor. It is a formal legal mechanism used to recover debts from companies and can be an effective step before commencing winding up proceedings.
If money is owed to you by a company, it is important to obtain legal advice to determine the most appropriate recovery strategy. A statutory demand can place significant pressure on the company to resolve the outstanding debt promptly.
If your company has been served with a statutory demand, you should seek legal advice and not ignore the document. Failure to comply with the strict time limits can result in serious consequences, including a presumption of insolvency and winding up proceedings being commenced against the company.
A statutory demand is a formal written request that requires a company to pay a debt within 21 days from when the request is served. The demand must be accompanied by a supporting affidavit and comply with the requirements set out in section 459E of the Corporations Act 2001 (Cth).
If the company fails to comply with a statutory demand within the required timeframe, the company is presumed insolvent. Following the failure to comply, a creditor can make an application to the court pursuant to sections 459A and 459P of the Corporations Act 2001 (Cth) seeking orders to wind up the company.
The process generally involves:
Yes. A company can make an application to have the statutory demand set aside under section 459G of the Corporations Act 2001 (Cth).
Importantly, the application to have the statutory demand set aside must be filed within the 21 day period from when the demand was served.
The Court will determine whether the application to have the statutory demand set aside is ordered, having regard to:
An offsetting claim refers to a genuine dispute between the company and the creditor regarding the existence of the debt in question. The offsetting claim is by way of a counter-claim, set off or cross-demand against the creditor.
The Courts have held that a genuine dispute requires the grounds of the claim to be “real and not spurious, hypothetical, illusory or misconceived.”1
If a valid offsetting claim exists, the Court may set aside the statutory demand. Where the underlying dispute concerns a breach of contract, see our contract and commercial disputes lawyers page.
If a company ignores the statutory demand or fails to properly respond within the prescribed 21 day period:
Given the seriousness of these consequences, we recommend that you contact us upon receiving a statutory demand to obtain legal advice on your next steps.
Citilawyers are knowledgeable on the topic and are able to provide practical legal solutions to recover the debt that is owed to you.
If you are a creditor and currently experiencing a debt recovery issue in relation to money owed to you by a company or if you are a company that has been served with a Statutory Demand, reach out to speak with our team.
If you are a creditor needing to issue a statutory demand, or a company that has been served with one, contact Citilawyers today. The 21-day deadline runs from the date of service; early advice protects your position.
A statutory demand can arise when a company fails to pay the debt owed to a creditor. It is a formal legal mechanism used to recover debts from companies and can be an effective step before commencing winding up proceedings.
If money is owed to you by a company, it is important to obtain legal advice to determine the most appropriate recovery strategy. A statutory demand can place significant pressure on the company to resolve the outstanding debt promptly.
If your company has been served with a statutory demand, you should seek legal advice and not ignore the document. Failure to comply with the strict time limits can result in serious consequences, including a presumption of insolvency and winding up proceedings being commenced against the company.
A statutory demand is a formal written request that requires a company to pay a debt within 21 days from when the request is served. The demand must be accompanied by a supporting affidavit and comply with the requirements set out in section 459E of the Corporations Act 2001 (Cth).
If the company fails to comply with a statutory demand within the required timeframe, the company is presumed insolvent. Following the failure to comply, a creditor can make an application to the court pursuant to sections 459A and 459P of the Corporations Act 2001 (Cth) seeking orders to wind up the company.
The process generally involves:
Yes. A company can make an application to have the statutory demand set aside under section 459G of the Corporations Act 2001 (Cth).
Importantly, the application to have the statutory demand set aside must be filed within the 21 day period from when the demand was served.
The Court will determine whether the application to have the statutory demand set aside is ordered, having regard to:
An offsetting claim refers to a genuine dispute between the company and the creditor regarding the existence of the debt in question. The offsetting claim is by way of a counter-claim, set off or cross-demand against the creditor.
The Courts have held that a genuine dispute requires the grounds of the claim to be “real and not spurious, hypothetical, illusory or misconceived.”1
If a valid offsetting claim exists, the Court may set aside the statutory demand. Where the underlying dispute concerns a breach of contract, see our contract and commercial disputes lawyers page.
If a company ignores the statutory demand or fails to properly respond within the prescribed 21 day period:
Given the seriousness of these consequences, we recommend that you contact us upon receiving a statutory demand to obtain legal advice on your next steps.
Citilawyers are knowledgeable on the topic and are able to provide practical legal solutions to recover the debt that is owed to you.
If you are a creditor and currently experiencing a debt recovery issue in relation to money owed to you by a company or if you are a company that has been served with a Statutory Demand, reach out to speak with our team.
If you are a creditor needing to issue a statutory demand, or a company that has been served with one, contact Citilawyers today. The 21-day deadline runs from the date of service; early advice protects your position.
Yes. A statutory demand is a serious legal document that is served on companies. If the demand is not properly addressed within 21 days, the company may be presumed insolvent and face winding up proceedings.
Pursuant to section 459E of the Corporations Act and Corporations Amendment (Statutory Minimum) Regulations 2021 (Cth), the minimum debt required to serve a statutory demand is $4,000. The debt that is owed by a company can be made up of a single debt or multiple and must be due and payable.
No. A statutory demand can only be issued against companies. Different legal processes apply to individuals and sole traders to recover debts.
If the company raises a genuine dispute regarding the debt, the company may apply to have the demand set aside under section 459G of the Corporations Act 2001 (Cth).
If only partial amounts are paid, the creditor may agree to that amount and not pursue the matter further. If the creditor wants to continue pursuing the money owed, the residual amount remains and a winding up application can still be made.
Whilst it is not a legal requirement, obtaining legal advice is strongly recommended. Statutory demands involve strict procedural requirements and deadlines. Failure to follow the correct procedure can have significant consequences given the nature of a statutory demand.
