Statutory Demand - Conclusion
From a debtor's point of view, the problem with the Statutory Demand is that once the time for compliance has expired, unless there is a valid application filed and served to set the Statutory Demand aside, there is absolutely no opportunity of contesting the Statutory Demand.
The only way of dealing with the Statutory Demand in those circumstances is to pay the debt, reserve one's rights and sue for the money back. That of course can create major problems particularly if the debt claimed is in fact disputed.
A company that would otherwise be solvent can find itself having to pay a debt it believes it does not owe and one which may render it insolvent.
A creditor, using a Statutory Demand as a quick means of a debt recovery can likewise have the whole thing blow up in their face. All the debtor has to show to set aside the Statutory Demand is that there is some genuine dispute. The court is not interested in the merits of the dispute - just the fact that one exists and ought to be tried.
If however you have received a Statutory Demand, it may be time to consider the position of the company and your position as director.
Directors of companies that are trading entities and that are insolvent, leave themselves open to potential insolvent trading claims. Consequently, the receipt of a Statutory Demand is possibly a time to think about your exit strategy from the company or how the company's business may be saved - such as through a Voluntary Administration or a Creditors Voluntary Liquidation.
