Situation
A Company owes me $30,000 for goods it purchased from me. What can I do?
If the Company does not respond to a letter of demand, the next step can often be to serve a Creditor's Statutory Demand.
Issuing a Statutory Demand
A Statutory Demand requires the Company to satisfy its debt to you within 21 days of service. If the Company fails to do so, or fails to apply to set aside the Statutory Demand within the 21-day period, then you are entitled to apply to the Supreme Court for the Company to be wound up. For this reason, in our experience, a Statutory Demand can be a highly effective way of encouraging the Company to pay because most companies do not want to have a liquidator appointed. However, a Statutory Demand may not be used to recover a debt when the debt is genuinely disputed by the debtor.
Rules and requirements of a Statutory Demand
Further, there are very specific rules and requirements in relation to the format and content of a Statutory Demand. Should a Statutory Demand ultimately be set aside, you may be ordered to pay the debtor's Court costs, as well as being responsible for paying your own legal costs. Accordingly, it is important to ensure that the process is handled correctly.
For more information surrounding the process of serving a Statutory Demand, or for winding up proceedings based on an unsatisfied Statutory Demand, please see the Federal Court of Australia's website.
How can Sharrock Pitman Legal assist?
If you feel that serving a Statutory Demand could assist you and your business or if you require any additional information surrounding this process please feel free to get in touch with our Litigation team on 1300 205 506 or email litigation@sharrockpitman.com.au. Alternatively fill in the form below.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Caroline Callegari is an Associate Principal and leads our Disputes & Litigation team. She has an advisory and advocacy practice in the following areas: Commercial Litigation, corporate and personal disputes, debt recovery and, insolvency and bankruptcy matters. Caroline can be contacted on (03) 8561 3324.
