What are Statutory Demands?
Statutory Demands are formal legal notices served on a corporate debtor in accordance with the Corporations Act 2001, requiring the debtor to comply with the debt, compound for the debt (reach an agreement with the creditor) or apply to the Court to set aside the demand, within 21 days after receipt of the demand.
If the corporate debtor fails to undertake any of these steps within the 21 days, then the presumption of insolvency will raise against the company, allowing the creditor to commence proceedings to wind up the company.
When there is no genuine dispute regarding the debt, statutory demands are powerful debt recovery tools that can place significant pressure on corporate debtors to settle outstanding obligations quickly.
When Can You Issue Statutory Demands?
The requirements to issue statutory demands are:
(a) the debt must be due and payable - it can be under an outstanding invoice or under a judgment debt.
(b) the debt must exceed $4,000.00 (current statutory minimum);
(c) the debt must be owed by a company;
(d) there must be no genuine dispute about the debt; and
(e) the debt cannot be subject to an offsetting claim.
At Odyssey Legal, we ensure your statutory demands are properly prepared and served, avoiding technical defects that could invalidate the demand or delay debt recovery.
Letter of Demand vs Legal Action: What’s the Right First Step? GalleryLetter of Demand vs Legal Action: What’s the Right First Step?
Bankruptcy Lawyer & Corporate Insolvency, Building + Construction Disputes, Business, Business Disputes, Civil & Personal Litigation, Commercial Litigation, Corporate Disputes, Debt Recovery, News & Articles, Queensland Lawyers, Tax Debt Disputes
Letter of Demand vs Legal Action: What’s the Right First Step?
Letter of Demand vs Legal Action: What’s the Right First Step? When a business dispute arises, many people are unsure whether to send a letter of demand or to commence legal proceedings immediately. While legal action may sometimes be necessary, it is not always the most effective or commercially sensible first step. In many situations, a properly prepared letter of demand can quickly resolve a dispute, preserve commercial relationships, and avoid unnecessary legal costs. [...]
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Bankruptcy Lawyer & Corporate Insolvency, Building + Construction Disputes, Business, Business Disputes, Civil & Personal Litigation, Commercial Litigation, Corporate Disputes, Debt Recovery, News & Articles, Queensland Lawyers, Tax Debt Disputes
ATO Tax Debt: What Happens If You Don’t Pay?
ATO Tax Debt: What Happens If You Don’t Pay? Many businesses experience periods of financial pressure, particularly during challenging economic conditions or approaching the end of financial year. While tax debt may begin as a manageable issue, ignoring ATO obligations can lead to serious consequences for both businesses and directors. The Australian Taxation Office has extensive [...]
Frequently Asked Questions
Insolvent trading occurs when directors allow a company to incur debts when it is already insolvent. This can lead to personal liability for those debts.
Generally, directors are not personally liable. However, they may be held accountable for insolvent trading, breaches of duty, or personal guarantees.
The liquidator investigates the company’s affairs, recovers assets, pays creditors, and ensures a fair and legal winding-up process.
Liquidation can be initiated by the company’s directors, shareholders, or by a court order following a winding up application by a creditor.
When a company is insolvent and cannot pay its debts, or continuing operations will worsen the situation, directors may opt for liquidation to protect stakeholders' interests. It is imperative to take proactive steps and obtain advice promptly.
Voluntary administration is a process where an external administrator takes control of a financially troubled company to assess its viability and propose a plan to save the business or maximise returns to creditors.
The main types are:
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Creditors' Voluntary Liquidation (CVL): Initiated by insolvent companies.
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Court-Ordered Liquidation: Ordered by the court following an application from a creditor.
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Members' Voluntary Liquidation (MVL): For solvent companies that choose to close operations.
Odyssey Legal provides expert legal advice on bankruptcy and insolvency issues, helping clients explore alternatives, understand their rights and obligations, and navigate the legal processes involved.
Yes, if you owe $10,000 or more, a creditor can apply to the Court to make you bankrupt. This process involves serving a bankruptcy notice and, if unresolved, filing a creditor's petition with the Court.
The process involves submitting a Bankruptcy Form to the Australian Financial Security Authority (AFSA). Once accepted, a trustee is appointed to manage your bankruptcy.
Some professions have restrictions for bankrupt individuals. It's essential to check with your industry regulator or professional association to understand any implications.
Traveling overseas during bankruptcy requires written permission from your trustee. Unauthorised travel can lead to penalties or an extension of the bankruptcy period.
Certain assets are protected, including household items, tools of trade up to a specific value, and a vehicle up to a certain value. However, assets like real estate or investments may be sold to repay creditors.
Bankruptcy typically lasts for three years and one day from the date your bankruptcy is accepted. However, it can be extended in certain circumstances, such as non-compliance with obligations.
A debt agreement is a formal arrangement between you and your creditors to repay a percentage of your debts over time. It's a legally binding agreement that can provide relief from unmanageable debts.