In situations where a company has a debt which is due and payable, the creditor who is owed the money may issue a statutory demand for the payment of the debt.

What are the requirements for issuing a Statutory Demand?

A statutory demand must:

  • relate to a debt of at least $2,000.00 which is due and owing to the creditor making the demand;
  • be in writing;
  • be served on the company;
  • give the debtor company 21 days from the date the demand was served to pay the debt;
  • be signed by the creditor or on behalf of the creditor;
  • be in the correct form;
  • be accompanied by an affidavit confirming that the debt is owed to the creditor by the debtor company.

Once served with a statutory demand, the debtor company has 21 days to:

  • pay the debt; or
  • negotiate a payment plan or the payment of a lesser amount; or
  • apply to have the demand set aside by the court; or
  • do nothing.

Can a Statutory Demand be set aside?

A statutory demand may be set aside by the court where it is shown that there is a genuine dispute about whether the debt is owed or the amount of the debt, where the company has a claim against the creditor which offsets the debt, or where there is a defect in the demand.

What if the debtor doesn’t respond?

If the debtor company does nothing within the 21 day period, that company will be presumed to be insolvent.  The creditor can then make an application to the court to wind up the company based on the presumption of insolvency.  It is then up to the company to prove that they are not insolvent which can be quite difficult.

​For creditors wishing to issue a statutory demand, it is very important to adhere to the requirements in completing and serving the demand.  If the demand is not completed correctly or is not served on the correct party, the demand may be set aside by the court.

​Companies who are served with a statutory demand should seek legal advice immediately!  When a company does not take action within 21 days of being served with the demand, they risk having to face an application to wind up their company on the basis of insolvency.

Please do not hesitate to contact our office on (07) 4963 2000 or via our online contact form should you have any queries.

Lara Tom
Solicitor
Litigation & Dispute Resolution