If you have a debtor or money owed to you by a company, issuing a statutory demand can be a very effective means of recovering those monies if there is no genuine dispute about the debt.
A form 509h creditors statutory demand for payment of a debt is a written demand for payment served by a creditor on a company. Non-compliance by a company with a demand is the most common way to prove insolvency of a company and is a ground for winding up in insolvency. To avoid the risk of being wound up in insolvency, a company that has assets, may generally pay a creditor when served with such a document.
The Corporations Act 2001 (Cth) outlines what must be included in the document to ensure it is valid. The procedures must be strictly followed and need to be in clear, correct and unambiguous terms.
The form of statutory demands is set out under the Corporations Act. It is important that it is clear about a number of requirements including specifying the debt, for payment or satisfaction to be made within 21 days, be in the prescribed form and signed for the creditor. Due to the consequences of getting it wrong, and in particular, significant costs associated if it is set aside by the Supreme Court or Federal Court , Aitken Whyte Lawyers would strongly recommend getting legal advice and assistance in preparing and issuing a statutory demand.
Valid demands should only be issued where there is a debt due and payable and must be more than the statutory minimum of $2,000. Unlike a bankruptcy notice statutory demands don’t need to be based on a court judgment. An affidavit verifying the debt is due and payable must be attached to the demand where it is not a court judgment.
The demand must be served as prescribed by the Corporations Act and can include by leaving it at or posting it to the company’s registered office or delivering a copy personally to a director of the company.
Because a creditor has only 21 days to act on the demand before it is deemed to have committed an act of insolvency, proof of the date of service is very important. If applying to later wind up the company based on the act of insolvency, the Supreme Court or Federal Court will need to be satisfied as to when and how the statutory demand was served.
A creditor can voluntarily withdraw a statutory demand. This should be done by written notice to the debtor company or its solicitor.