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What is a Statutory Demand
A Statutory Demand is one of the most powerful business debt collection tools available to a creditor and is commonly used by the Australian Taxation Office, Workers compensation Insurers and trade suppliers.
The Statutory Demand may be issued immediately after a debt becomes due but can only be issued by a creditor if the debt is not disputed. In fact, a certificate must be signed saying no genuine dispute exists in relation to the debt.
The Statutory Demand allows the recipient or debtor company 21 days from the date of the demand to;
- Pay the debt in full; or
- File an application in court to have the demand set aside on the basis of a genuine dispute.
If within the 21 days an appropriate defence is not filed in court - the company is deemed to be insolvent!
This may mean that in as little as 8 weeks of the demand being served, the court could appoint liquidators to your company.
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