Recovering Company Debts Using Statutory Demands

Article Summary

A statutory demand can be one of the fastest and most powerful ways to recover an undisputed debt owed by an Australian company. Unlike an ordinary letter of demand, it engages the insolvency provisions of the Corporations Act 2001 (Cth) and gives the debtor company just 21 days to pay the debt, secure or compound it to the creditor’s reasonable satisfaction, or apply to the Court to have the demand set aside.

If the company fails to comply, it may be presumed insolvent, potentially allowing the creditor to commence winding-up proceedings. That consequence can create significant commercial pressure and often leads to payment or a negotiated resolution without the creditor first obtaining judgment through conventional debt-recovery litigation.