A creditor’s statutory demand is a formal demand served on a company under section 459E of the Corporations Act 2001 (Cth). It is very different from an ordinary letter asking for payment. If your company has received one, the clock is already running, so please get advice straight away.
The deadline is strict
Your company generally has 21 days after the demand is served to pay the debt, secure or compound it to the creditor’s reasonable satisfaction, or apply to the court to have the demand set aside. Under section 459G, the application to set aside and a supporting affidavit must be filed, and copies served on the creditor, within that 21-day period. The court cannot extend the time for making that application.
Don’t wait for negotiations to finish, and don’t assume that a conversation about payment stops time running. Unless the demand is withdrawn or dealt with properly, the deadline still applies.
What should you do now?
- Keep the demand, its attachments, the envelope and a record of how and when it arrived.
- Gather the contract, invoices, payment records and any correspondence about a dispute or a claim your company has against the creditor.
- Tell your lawyer immediately if you are unsure when or how the demand was served.
Can the demand be set aside?
Possibly. Grounds for setting a demand aside include a genuine dispute about the debt, an offsetting claim, a defect in the demand that would cause substantial injustice, or some other reason. The evidence and the procedure both matter, and the application has to be made in time.
If your company does nothing, it can be presumed insolvent, and the creditor can apply to have it wound up. Winding up means the company stops trading, a liquidator takes control and its assets are sold to pay creditors.
Speak with Hendersons Legal
Call us on (03) 9629 2211 and let us know your company has received a statutory demand, including the date it was served. You can also send us an enquiry, but please call if the deadline is close, as an enquiry does not stop time running.
Are you a creditor thinking about issuing a demand? Read our guide to using a statutory demand to recover a company debt.
This article provides general information about the law as described above. It is not advice on your circumstances. Laws, procedures and deadlines can change, so please get advice about your matter, particularly before signing documents or where a deadline may apply.
