STATUTORY DEMANDS — PART 5.4 CORPORATIONS ACT 2001 (CTH)
STATUTORY DEMANDS: YOU MUST ACT BEFORE 21 DAYS!
The statutory minimum debt ($4,000) and a set-aside application under s 459G must be filed AND served within the 21 days, with no extensions.
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UNDERSTANDING STATUTORY DEMANDS
Your Guide
Jaswinder Says
A statutory demand is won or lost in the first days: verify the debt, service, supporting affidavit and available set-aside grounds immediately.
— Jaswinder (Jas) Sekhon · Director / Principal
How the STAT DEMAND Process Unfolds
FROM SERVICE TO WINDING-UP RISK
The procedure begins when a compliant statutory demand is served on the company at its registered office or by another valid method. The 21-day period runs strictly, and the company cannot rely on informal negotiations while allowing the filing deadline to expire.
A genuine dispute, offsetting claim or defect causing substantial injustice may support a set-aside application if raised properly and in time. Non-compliance creates a presumption of insolvency that a creditor may rely on in a later winding-up application. The stages below show the usual sequence, but urgent legal review is required as soon as the demand is received or before one is issued.
Demand prepared & served
Confirm the debt, statutory minimum, prescribed form, affidavit requirements and legally effective service.
Company must act
Within 21 days (strict) the company must pay, secure or compound the debt, or file and serve a section 459G set-aside application. The 21-day deadline cannot be extended.
Set-aside application
File evidence of a genuine dispute, offsetting claim or qualifying defect and complete service within the statutory period.
Presumption of insolvency
If the demand is not complied with, the creditor may rely on the statutory presumption in a winding-up application.
How we instruct, brief and work with Barristers (Counsel) - Our litigation strategy.
Winding-up application
Prepare originating process, affidavits, publication and service, and address solvency, debt and discretionary issues.
How we instruct, brief and work with Barristers (Counsel) - Our litigation strategy.
Court hearing & outcome
The court may dismiss, adjourn or make a winding-up order, with liquidator appointment and costs consequences.
HOW MUCH DOES A DEMAND COST OR YOUR LEGAL COSTS TO SERVE OR ISSUE STAT DEMANDS?
INDICATIVE CUMULATIVE COSTS AND TIME
The cost pathway depends on whether the demand prompts payment, is resolved by negotiation, proceeds to a set-aside application or leads to winding-up litigation. Because the 21-day deadline is strict, legal work is often compressed and urgent evidence may be required from directors, accountants and the creditor.
The charts are illustrative only and do not account for every solvency report, contested debt issue, substitution application or appeal. A creditor should assess the risk of a genuine dispute before issuing, and a company should act immediately rather than using the demand as a negotiation timetable.
Statutory demand costs should be compared with the debt, recoverability, solvency evidence, the prospects of a genuine dispute and the commercial consequences of a winding-up application. Excluding counsel costs.
Indicative planning ranges only. Figures exclude GST and disbursements unless stated and must be confirmed in a matter-specific written estimate.
Videos, Guides and Articles
INSIGHTS AND PRACTICAL GUIDANCE
Use these resources to understand the procedure, prepare more effectively and identify the questions that should be addressed before the next stage.
VIDEOS & GUIDES
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
ARTICLES
ASSET PROTECTION MOVES INTO THE MARRIAGE? GAMBLING & WASTEFUL SPOUSES.
1. What is the issue?
The issue is whether “addbacks” — assets wasted, spent, or hidden by one spouse —
Court Intervention Held Necessary For General Dysphoria-Related Medical
Keywords: Family Law – Medical Procedures –
Full Court of Family Court Finds No Child Support Resulting Trust Favouring the
What is the Issue?
The case of Bass & Bass and Anor [2016] FamCAFC 64 (29 April 2016) was heard
Treat every statutory demand as a 21-day emergency!
- Immediate demand and service review
- Set-aside evidence and filing strategy
- Creditor and winding-up representation
Key terms defined
GLOSSARY — STATUTORY DEMAND TERMS
Statutory demand a formal demand under s 459E requiring a company to pay, secure or compound a debt of $4,000 or more within 21 days
Genuine dispute a real, not spurious, dispute about the existence or amount of the debt
Offsetting claim a genuine counterclaim, set-off or cross-demand reducing the amount payable
Presumption of
insolvencythe presumption arising from non-compliance, available for 3 months (s 459C)
Setting aside (s 459G) the court application to set the demand aside, filed and served within 21 days
Winding-up
application the creditor’s application to have the company wound up in insolvency.
Frequently Asked Questions
COMMON QUESTIONS
A statutory demand is the fastest way a company can be pushed towards winding up. The 21-day deadline cannot be extended once it passes. If a demand has been served on your company, read question four first.
A creditor’s statutory demand is a formal written demand under section 459E of the Corporations Act 2001 (Cth) requiring a company to pay a debt within 21 days. It is not a court order and it is not an ordinary letter of demand. Ignoring it is serious: the company is then presumed insolvent and can be wound up.
The debt must exceed $4,000. This statutory minimum has applied since 1 July 2021, when it was permanently doubled from $2,000. If the debt is $4,000 or less — or falls to that level once genuine offsetting claims are taken into account — the demand can be set aside.
21 days from the day the demand is served. Within that period the company must both file an application to set the demand aside and serve it, with a supporting affidavit, on the creditor. Filing alone is not enough — service inside the 21 days is essential.
No. The 21-day period under section 459G is strict and the court has no power to extend it once it has expired. This is the most common and most damaging mistake made with statutory demands. If a demand arrives, get advice the same week it is served.
A genuine dispute is a real, arguable disagreement about whether the debt is owed. The court does not decide who is right — only whether there is a plausible contention that needs investigating. The threshold is low, but the dispute must be genuine and supported by evidence, not merely asserted.
An offsetting claim is a genuine counterclaim, set-off or cross-demand the company has against the creditor. It does not have to arise out of the same transaction. If the offsetting claim brings the debt down to $4,000 or less, the demand can be set aside, or the amount varied.
Yes, but generally only where the defect would cause substantial injustice — for example a materially misstated amount, a wrongly identified creditor, or a missing or non-compliant affidavit. Minor errors that mislead nobody will not be enough. A court can also set a demand aside for “some other reason”.
They can, but they should not. Issuing a statutory demand where there is a genuine dispute is an abuse of the process. The likely outcome is that the demand is set aside with a costs order against the creditor, sometimes on the indemnity basis, and the debt still has to be sued for in the ordinary way.
The company is presumed to be insolvent. The creditor can then apply to wind the company up, and that application must generally be made within three months after the compliance period ends. At the winding-up hearing the company cannot raise the dispute about the debt without the court’s leave.
Solvency evidence can rebut the presumption of insolvency at a winding-up hearing, but it is expensive, needs detailed and current financial evidence, and does not cure a missed set-aside deadline. It is a fallback, not a plan. Responding properly within 21 days is far cheaper.