Creditor's statutory demands ("statutory
demands") are often used by creditors as a method of
debt recovery – issued to force a debtor company into paying
the debt or risk being wound up.
The Courts have cautioned against the use of statutory demands
for this purpose, noting that when a debtor company is solvent, the
right course is to bring an action for debt, so pursuing a winding
up is an abuse of the Court process.
Statutory demands serve a public interest because they tend to
discourage or prevent insolvent companies from continuing to
trade.
Unsurprisingly, the statutory demand provisions of the
Corporations Act 2011 (Cth) ("Act") are
some of the most highly litigated provisions of any legislation in
Australia, particularly regarding applications to have them set
aside (Sections 459G and 459J).
