Owed more than $4,000 by a company? You may want to consider issuing a Statutory Demand

Maintaining cash flow is essential for business operations. If invoices remain unpaid after reminders or alternative resolutions, you may be left considering what formal steps are available to recover the debt.

If your business is owed more than $4000 by a company, issuing a Statutory Demand might be an option worth considering.

Basics of a Statutory Demand

A Statutory Demand is a formal document that creditors can serve on companies to demand payment of outstanding debts. Under the Corporations Act 2001, companies have just 21 days to:

• Pay the debt in full; or

• Apply to set aside the demand.

If they don’t, the company is legally presumed to be insolvent, which allows the creditor to apply for a winding-up order.

Before issuing a Statutory Demand, you need to ensure that you can meet the specific criteria, which are set out below:

• Minimum debt amount: The debt must be more than $4,000.

• Company debtor: Statutory demands can only be served on companies, not individuals or sole traders.

• Due and payable: The debt must be currently owed and not subject to future conditions.

• Clear amount: You must be able to specify the exact amount usually supported by invoices.

If you meet the above criteria, contact our Business and Commercial Team at MCW Lawyers here to discuss issuing a Statutory Demand for debts over $4,000 or other debt recovery options.