If a company owes a creditor at least $4,000, that creditor may serve a statutory demand on the company. Once the statutory demand is properly served, the debtor company has 21 days to either pay the debt, negotiate a settlement with the creditor, or apply to set the demand set aside; failing which the company will be deemed to be insolvent and may be wound up. As such, it is dangerous to ignore a statutory demand – the company may be wound up.

A company may apply to set aside a demand if there is a genuine dispute about the debt, if it has an offsetting claim, and/or if the demand has defects.

Creditors should not use a statutory demand if there is a genuine dispute or an offsetting claim; or they risk having a costs order issued against them in any proceedings to set aside the demand. If there is some uncertainty as to whether the debt is due and payable or whether a genuine dispute may exist in relation to a debt, then a statement of claim may be a more suitable course of action.

Our solicitors are very experienced with statutory demands and winding up proceedings; and can advise as to whether this is a viable option for you.