For businesses in Australia, receiving a creditor’s statutory demand can be daunting and difficult to navigate. It is crucial to understand the legal requirements and how to effectively manage this legal challenge. As a prominent law firm on the Gold Coast and Brisbane, we specialise in guiding clients through the complexities of the Corporations Act 2001 (Act).
What is a Creditor’s Statutory Demand?
In Australia, a creditor’s statutory demand (Demand) is a formal request for the payment of a debt, now exceeding $4,000, issued to a company. This document requires the recipient to pay the debt or arrange a payment arrangement (to the satisfaction of the creditor) within 21 days. Addressing these demands promptly and accurately is essential to avoid serious consequences, such as a winding up application.
Immediate Steps to Take
Review the Demand Thoroughly
We recommend reviewing the Demand thoroughly to ensure it is not defective and complies with the Act, including that the debt amount is correct, the parties details are correct and the form is the approved form under the Act.
Consult with a Legal Expert
It is important to seek legal advice to determine the best strategy moving forward.
Pay the Debt
If the debt is valid and you have the financial capacity, immediate payment is the simplest resolution.
Negotiate with the Creditor
Discuss the possibility of negotiating a feasible repayment plan or a reduced debt amount with the guidance of your expert Gold Coast Litigation Lawyer.
Challenge the Demand
If there are defects in the Demand, you may apply to the Court to set aside the Demand on the basis that it is defective or there is a genuine dispute in respect of the debt. You will be required to file your Application within 21 days of receiving the Demand.
Consequences of Ignoring the Demand
Failing to respond to a Demand can lead to an assumption of insolvency and the subsequent filing of a Court Application to place your company into liquidation.
Regular communication with the creditor can prevent unexpected Demands.
Regular Financial Assessments
Conducting periodic financial reviews is recommended to identify and mitigate potential risks.
Effectively handling a creditor’s statutory demand on the Gold Coast and in Brisbane requires serious consideration and legal advice. Book in today for a free 20 minute strategy call or a 60 minute consultation to obtain legal advice about your options moving forward. We specialise in this area of law and are experienced in navigating this complex issue successfully.
Associated Director at Moore Lawyers