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ARTICLE · 08 JULY 2011

Demands: Effective Weapon or Double-edged sword?

For many creditors, the lure of the Statutory Demand is a strong one.

AustraliaCorporate/Commercial Law
Trying to recover payment from tardy debtors is a difficult issue for many businesses – especially in the current economic climate. Everyone is looking for the "magic bullet" that will guarantee a quick payment and, for many creditors, the lure of the Statutory Demand is a strong one!

Essentially, a Creditors Statutory Demand under section 459E of the Corporations Act 2001 is a legal demand for payment of a debt from a corporate debtor. The possible consequences of non-payment make this type of Demand quite potent against debtors as a failure to pay within 21 days may result in the debtor being deemed to be insolvent. However, as a creditor, you also need to take some care so that the Demand does not become a double-edged sword.

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