Oh Look! A Creditor’s Statutory Demand
If you have received a Creditor’s Statutory demand DO NOT DELAY! It is essential that you act and immediately seek legal advice.
The 21-day time limit is very strict and time starts ticking from the moment of delivery to your registered office. This may mean that you already do not have the full 21 days and your options decrease in proportion to the amount of time you have left.
1. Be Alert, Not Alarmed
The first step will be to ascertain WHEN exactly the Creditor’s Statutory Demand was served upon your Company’s registered office. A date stamped on the received envelope can be useful. Otherwise, if it was posted to your street address, please keep the envelope as it may be possible to utilize the Australia Post tracking number to ascertain the delivery date.
2. Does It Really Matter If I Don’t Know The Exact Date?
It might. The 21-day time frame is strict and cannot be extended. At the expiration of the 21-day time frame a ‘presumption of insolvency’ automatically arises and the presumption exists for 3 months. This presumption can expose your company to an application to the Court for an order that the Company be wound up and a liquidator appointed. Besides losing control over your company and its bank accounts, assets, existing business networks and good will, this can also have adverse consequences on you personally as a director.
3. What Are My Options?
a) Call your Enterprise Legal advisor as soon as possible. We will ascertain whether:
i. the Demand is technically compliant with the legislation;
ii. the Demand was properly served; and
iii. the debt is disputed.
b) Depending on those results, most options include:
i. Pay the demand in full and satisfy the debt;
ii. Instructing Enterprise Legal to write that the debt is disputed and include available evidence in support, note any technical failings and demand that the Creditor’s Statutory Demand be withdrawn; or
iii. File and serve a Supreme Court application to have the Creditor’s Statutory Demand set aside.
All 3 of the available options MUST occur within the 21-day period, otherwise your company will be statutorily presumed insolvent. There is an exponential increase in costs to save your company after the 21-day deadline has passed.
Have you been served with a Creditor's Statutory Demand?
Front-foot it by making an appointment with EL's Principal Legal Advisor - Disputes, Kirsten Woolston to discuss your options: