Statutory demands for debt owed by company

If you are owed more than $2,000 by a company and you are concerned the company cannot pay the debt, you can serve on that company what is called a ‘statutory demand’ which gives the company 21 days to pay.   If the company does not pay within that 21 days (or come to some agreed arrangement with you) it is deemed to be insolvent and will be wound-up.

Just as an individual can be made bankrupt, so a company can be liquidated (wound-up).  The difference is that the individual eventually comes out of bankruptcy and may live to fight another day, whereas a company that is liquidated will cease to exist at the completion of the liquidation.

The debt must be due and payable and there must not be any genuine dispute about it, in the sense that the alleged dispute must not be “spurious, hypothetical, illusory or misconceived”. There must also not be any off-setting claim by the company against you.

A statutory demand is therefore like a letter of demand only much more potentially damaging.  The 21-day limit is very strict and so you are assured of getting the company’s full attention if you serve such a demand.

There are, however, a lot of technical rules relating to the form and service of the demand so it is not an activity for the DIY creditor. 

Our fixed fee of $990 including GST reflects the serious nature of the document.