Statutory Demands

Pursuant to section 459E of the Corporations Act 2001 (Cth), in the majority of circumstances, a creditor can serve a statutory demand on a company in respect of any debt which is $4,000 or greater. The company then has 21 days from the date of service of the statutory demand to pay the debt to the creditor or apply to set aside the statutory demand. If the company fails to pay the debt, then it commits an ‘act of insolvency’ and the creditor may then proceed to seek to wind up the company and have it placed into liquidation.

The possibility of liquidation is a serious concern for any company and for that reason statutory demands are commonly used as a debt collection tool by creditors. However, creditors do need to be careful not to misuse statutory demands as the debtor company may apply, pursuant to s459G of the Corporations Act 2001, to have the statutory demand set aside if there is a genuine dispute in respect of the alleged debt or the debtor company has an offsetting claim against the creditor.

It is important to note that an application to set aside a statutory demand must be made within 21 days of the statutory demand being served on the debtor company and for that reason it is vitally important that a company who is served with a statutory demand urgently seek legal advice as soon as possible.

Rowe Bristol Lawyers has extensive experience in providing legal advice to clients in respect of how to issue and set aside a statutory demand. If you require legal advice in respect of a statutory demand, please contact us to arrange a meeting so that we may consider and advise you on your specific circumstances.

If you require legal advice in relation to any aspect of statutory demands, please contact us to arrange a meeting so that we may consider your specific circumstances.

The above information in relation to statutory demands is provided as general information only and should not be relied upon as legal advice. The accuracy of this information may have changed from the date when it was published.