As the name implies, a statutory demand is a serious legal injunction. Whether your business finds itself in the position of issuing or receiving a statutory demand, the process should never be taken lightly—and you should always review your situation with a certified professional.

 

Questions about statutory demands in general? Debtor or creditor woes? Concerns about re-payment plans? Bryant & Bryants expert team can offer counseling and clarity in the event of a statutory demand being made by or toward your organisation.

 

Below, you’ll find a list of frequently asked questions (and their accompanying answers) regarding statutory demands. For further information, please don’t hesitate to contact and Bryant & Bryant consultant. 

 

What is a statutory demand?

 

A statutory demand is a formal legal demand issued to a company that has accrued a debt. Such a demand requires the organisation in question to do one of the following:

a) pay the entire amount due (or enter into payment arrangements with the creditor to settle the debt) within 21 days of receipt

 

or

b) declare itself insolvent, thereby allowing the creditor to make an application to the courts to wind up the company.

How is a statutory demand made?

A statutory demand is made using a prescribed form (Form 509H), as per the Corporations Act 2001 (Cth). The demand must be served by mail to the indebted company’s directors at the company’s registered office address. Interstate service requirements may also apply.

A demand must also:

 

  • Be in written form
  • Be signed by the creditor or on the creditor’s behalf (by, for example, a company director or an authorised legal representative)
  • Clearly state the debtor’s company name and registered office address
  • Provide specific instructions as to how and where a payment can be made

Who is able to issue a statutory demand?

Any creditor who is owed outstanding monies may serve a statutory demand to a debtor company in cases where:

a) the debt owed is equal to or greater than the statutory minimum of $2,000

 

and

b) there is no genuine dispute regarding the debt itself.

If either of the above stipulations is in question, the debtor may apply to the federal court and request that the demand be set aside by legal order.

Do I need to have a judgement against a creditor if my company wishes to issue a statutory demand of its own?

Having a judgement against a creditor is unnecessary. Instead, the demand itself can be accompanied by an affidavit of support. Alternatively, a court judgement may also meet the legal requirements necessary for the issue of a demand.

Are company directors responsible for statutory demands?

As outlined under the Corporations Act 2001 (Cth), directors have distinct company responsibilities. Such responsibilities exist in addition to any fiduciary duties the director may hold as mandated by common law. Where directors have asserted a personal guarantee, they may in turn be personally liable for debts—including debts that are subject to a statutory demand. In such instances, directors should seek expert advice regarding their debt liability.

 

What happens if a statutory demand cannot be paid off in 21 days?

If you receive a statutory demand and are unable to pay off the debt within the prescribed period, you should consult with a qualified professional such as an accountant or a solicitor as soon as possible. These individuals may help provide some guidance regarding your specific financial position.

 

How much does it cost to issue a statutory demand?

There is no fee to issue a statutory demand. However, fees may incur for professional services employed in relation to the issue of the demand (such as the drafting and witnessing of an affidavit). If the demand is not met, and the creditor wishes to file a wind-up order against the indebted company, an added fee may also apply.

 

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