What is a statutory demand?

Where a creditor is owed a liquidated debt of $4,000 or more by a company, they may serve a statutory demand under s 459E of the Corporations Act 2001 (Cth). If the debtor company fails to pay the debt or apply to set aside the demand within a strict 21-day period, the company is presumed insolvent. The creditor may then apply to the Supreme Court to wind up the company. It is a highly effective debt recovery tool, but requires precise drafting to avoid being set aside.

Need legal advice for your Queensland startup? Every startup is different and general information is no substitute for advice tailored to your specific business, software architecture, and industry.

Contact our business law team for a confidential consultation. Call (07) 5532 8777.

Read our Complete Startup Legal Guide for Queensland