Commercial Law: When is a creditor's statutory demand appropriate?

A creditor's statutory demand ("statutory demand") is a demand for monies under section 459E of the Corporations Act. It cannot be used for any other remedy, such as rectification works, or to put forward an obligation under a contract. Unless the debt is a judgement debt, a statutory demand must be accompanied by an affidavit of a relevant person with knowledge of the debt, who must state that the debt is outstanding, and that there is no genuine dispute about the debt.

Use of Statutory Demand

A statutory demand must not be used as a general debt collection tool or to put pressure on a company to pay money. A statutory demand is only available to a creditor where there is no genuine dispute over the monies, no genuine offsetting claim and where it is believed that the company is insolvent.