Issue a statutory demand
We prepare demands that are difficult to set aside, so the 21 days work for you rather than against you.Some debtors pay only when not paying becomes more expensive than paying. A statutory demand is the cheapest way in Australian law to make that true. It carries no filing fee, it runs for 21 days, and at the end of it a company that has not paid is presumed insolvent and can be wound up. The mechanism sits in the Corporations Act 2001 (Cth) (the Act), and it is unforgiving in both directions: overstate the debt slightly, use the wrong form, serve it at the wrong address, or send it on a debt the company can genuinely dispute, and the demand is set aside with costs ordered against you.
Hard to set aside
The amount, the form and the service are checked before service, because those three things are where demands fail.
Pressure without a filing fee
A statutory demand costs nothing to lodge and creates more urgency than most litigation manages.
The next step already built
Non-compliance leaves you holding a presumption of insolvency, which is the foundation of a winding up application.
What is a statutory demand, and why does it work?
A statutory demand is a formal written demand served on a company under the Act for an undisputed debt of at least $4,000, requiring payment within 21 days. A company that neither pays nor applies to set the demand aside inside that window is presumed insolvent, which is the foundation a creditor needs to apply to wind it up. That presumption is what gives the document its force. It costs nothing to lodge, it moves faster than litigation, and it puts the debtor to a choice between paying you and defending its own existence.
Can the company fight a statutory demand?
Yes. It has 21 days to apply to the court to set the demand aside. The usual grounds are a genuine dispute about the debt, an offsetting claim that drops the balance below the threshold, or a defect in the demand itself. The company does not have to be right about the dispute, only to show there is a real one, which is why demands should only go out on debts that cannot be argued about.
What is the minimum debt for a statutory demand?
$4,000 under the Act. It can be made up of several debts owed by the same company as long as the total clears the threshold. Below that figure a statutory demand is not available and you will need a different enforcement route.
What if they pay part of the debt?
It depends on where the balance lands. If a part payment takes the remaining debt below the threshold, the demand is no longer effective. If it stays above, the demand can survive for the balance in some circumstances, but the position needs care. Tell us before you accept a part payment rather than after.
Can I use a demand for a debt they might dispute?
You can, and it is usually a mistake. If the company raises a genuine dispute the demand is set aside and you pay its costs, having gained nothing and warned it of your intentions. Where a debt is genuinely contested, ordinary recovery proceedings are the safer route and we will tell you so.
The clock only starts once the demand is served
Send us the invoices and any judgment. We will confirm the debt qualifies, tell you whether a dispute is likely to be raised, and have a demand ready to serve quickly, because every week before service is a week your debtor still has the money.
A demand that can be set aside costs you twice
The debt is clear, the invoices were never queried, and letters and calls have stopped producing anything at all. You want a step with consequences attached, but the step you have heard about is also the one that can rebound: get the form, the amount or the service wrong and you will be paying the debtor’s costs on top of a debt you still have not recovered. The question is not whether to use a statutory demand. It is whether yours would survive contact with the debtor’s lawyer.
- We will confirm your debt qualifies for a statutory demand and tell you the risk of a set-aside application.
- We will verify the amount and the interest calculation to the cent before anything is served.
- We will prepare the demand in the prescribed form, with a supporting affidavit where one is required.
- We will serve the demand so that service can be proved, and monitor the 21-day period.
- We will defend a set-aside application or file the winding up application, depending on what your debtor does.
The invoices are undisputed and the company has simply stopped paying
You supplied a company on ordinary trade terms. The work was accepted, the invoices went out, and nobody ever raised a problem with any of them. Then the payments stopped, then the calls stopped being returned, and now you are dealing with a debtor who is not arguing with you so much as ignoring you. You may already hold a judgment that has produced nothing. What you need is a step a debtor cannot ignore, because the consequence of ignoring it is one they cannot absorb.
What's included in your statutory demand service
- Debt eligibility assessment and set-aside risk advice.
- Verification of the amount claimed and the interest calculation.
- Statutory demand prepared in the prescribed form, with supporting affidavit where required.
- Provable service and monitoring of the 21-day period.
- Set-aside defence, or the winding up application once the period expires.
The cost of a defective demand
A demand that gets set aside does more than fail. The presumption of insolvency disappears, the court usually orders you to pay the debtor’s costs, and you have announced exactly what you intend to do while handing the debtor time to prepare for it.
The defects that cause this are small ones. An amount overstated by a few hundred dollars because interest ran from the wrong date. Service at a registered office that is no longer the registered office. The wrong version of the prescribed form. A debt the company can characterise as genuinely disputed, which does not require it to be right, only to raise a plausible argument. Debtors who have been through this before know every one of those, and their lawyers look for them first. While that plays out the company keeps dealing with its assets, and whatever urgency the demand was meant to create has gone.
From an unanswered invoice to a debtor with 21 days
We start with whether the debt can carry a demand at all, which means checking the amount to the cent, the date interest runs from, and the paper trail standing behind it. Then we go looking for the argument the debtor would run. If there is anything in the correspondence that could be dressed up as a genuine dispute or an offsetting claim, it is far better to find it now than in a set-aside application.
We prepare the demand in the prescribed form, with the supporting affidavit where one is required, and serve it in a way that can be proved later. Then the 21 days do the work. A properly prepared demand arriving from a law firm changes the debtor’s calculation immediately, and companies that spent months ignoring invoices very often become interested in settling within the fortnight. If they do not, your winding up application is already standing on solid ground.
How we get the demand right
Prepare it properly, serve it provably, and let the clock do the work.Check it qualifies
We confirm the debt is due, undisputed and above the threshold, verify the amount and interest, and identify any argument the debtor could raise.
Draft and serve
We prepare the demand in the prescribed form with any supporting affidavit, and serve it in a way that can be proved if service is later challenged.
Press the advantage
We monitor the 21 days, deal with any payment or settlement proposal, defend a set-aside application, or file the winding up application if the demand goes unanswered.
Demands drafted by someone who has also defended them
There is a particular frustration in a debtor who disputes nothing and simply does not pay. Nothing is actually in issue, there is no argument to have, and the ordinary remedies all assume there is one.
One of our lawyers holds the ARITA Advanced Certificate in Insolvency and is a member of the Australian Restructuring Insolvency and Turnaround Association. We prepare and serve statutory demands for creditors across a range of industries, and we have acted on set-aside applications from the other side, which is where you find out what the defects actually are. We will also tell you when a demand is the wrong tool, because using one on a debt that can be disputed is how creditors end up paying costs.
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Put your debtor on 21 days
Send us the invoices and any judgment. We will confirm the debt qualifies, prepare a demand that is difficult to set aside, and serve it properly, so the choice facing your debtor is paying you or facing a winding up application.
More on this area of law
Read more about statutory demands, winding up applications and commercial debt recovery, and how ADLV Law can help.