If a company owes you money and claims that it can't pay, a
creditor's statutory demand (CSD) is a very
handy device. If a creditor claims a debt using a CSD, the debtor
company has 21 days within which to either pay the amount demanded,
or to apply to a Court to set the CSD aside. If it fails to do
either of these things, the debtor company is deemed to be
insolvent and can be wound up.
When the alternative is to spend months or years proving a claim
in court, the attractions of using a CSD are obvious.
But a CSD can only be used in certain circumstances, and even
when it can be used, you have to get the relevant forms and
processes exactly right. If you don't, a court may grant the
debtor company's application to set aside the CSD and order you
to pay the debtor company's costs.
