Company Owes You Money But Won’t Respond: When to Issue a Statutory Demand

You’ve done the work. You’ve sent the invoice. You’ve followed up politely. You’ve sent a letter of demand. The company still hasn’t paid and now they’ve stopped responding entirely.

If the debtor is a registered company and owes you $4,000 or more, you have access to the most powerful debt recovery tool in Australian law: a statutory demand under section 459E of the Corporations Act 2001. It triggers a 21-day countdown and creates a presumption of insolvency if the debt is not paid or genuinely disputed.

What is a statutory demand?

A statutory demand is a formal written notice served on a company under section 459E of the Corporations Act 2001. It demands payment of a debt of at least $4,000 within 21 days.

If the company fails to pay or apply to set aside the demand within that time, it is presumed to be insolvent. That presumption allows you to apply to wind up the company.

The statutory demand is served using Form 509H, accompanied by a supporting affidavit that verifies the debt. The affidavit must be sworn before a Justice of the Peace or solicitor and sets out the facts proving the debt is owed.

The debt must be liquidated — a specific, ascertained sum that is due and payable. Not an estimate, not unliquidated damages.

When to use a statutory demand

Consider a statutory demand when:

• The debtor is a registered company (Pty Ltd or Ltd) — check the ASIC register
• The debt is $4,000 or more
• The debt is undisputed and liquidated (a fixed amount)
• You have already sent invoices and a letter of demand without success
• The company is ignoring you or has stopped responding
• You want to apply serious commercial pressure quickly

Do not use a statutory demand if:

• The debtor is an individual (use a letter of demand or tribunal application instead)
• The debt is less than $4,000
• The amount is genuinely disputed or uncertain
• You are claiming unliquidated damages
• The company has a valid offsetting claim against you

If the company genuinely disputes the debt, they can apply to set aside the statutory demand within 21 days. That is why you must be certain the debt is real, documented, and not subject to genuine dispute.

The $4,000 threshold

The Corporations Act sets a minimum threshold of $4,000 for a statutory demand. If the debt is $3,999, you cannot use this tool.

The threshold exists to prevent trivial claims from triggering insolvency proceedings.

If you are owed less than $4,000, your options are:

• A letter of demand followed by a tribunal application in your state’s small claims tribunal
• A final demand letter escalating the matter
• Engaging a debt collector or solicitor

If you are owed multiple invoices from the same company that together exceed $4,000, you can combine them into a single statutory demand — provided they are all due and payable.

The 21-day payment window

Once the statutory demand is served, the company has exactly 21 days to:

1. Pay the debt in full
2. Apply to the court to set aside the demand (on grounds such as genuine dispute or offsetting claim)
3. Do nothing

If the company does nothing, the presumption of insolvency arises. You can then apply to wind up the company under section 459P of the Corporations Act.

If the company applies to set aside the demand, the court will consider whether:

• There is a genuine dispute about the debt
• The company has an offsetting claim
• There is some other reason to set aside the demand (such as defect in the form or service)

If the court sets aside the demand, you are back to square one. If the court dismisses the application, the demand stands and the company must pay.

Most companies do not let it get that far. The threat of insolvency and wind-up is typically enough to prompt payment or serious negotiation.

Presumption of insolvency and wind-up proceedings

If the company fails to comply with the statutory demand within 21 days, section 459C(2)(a) of the Corporations Act creates a presumption that the company is insolvent.

This presumption shifts the burden of proof. In a wind-up application, the company must prove it is solvent — you do not have to prove it is insolvent.

You can then file an application to wind up the company in the Federal Court or Supreme Court. If successful, the court appoints a liquidator who takes control of the company’s assets and distributes them to creditors.

Wind-up proceedings are expensive and time-consuming. Most creditors use the statutory demand as leverage to force payment or settlement, not as a prelude to liquidation. But the threat is real.

How to prepare and serve a statutory demand

A statutory demand must be in the prescribed form — Form 509H under the Corporations Regulations 2001. It must include:

• The name and ACN of the debtor company
• The amount of the debt
• A description of the debt (invoice number, date, description of work or goods)
• A statement that the company has 21 days to pay or apply to set aside the demand
• The creditor’s details and address for service

The demand must be accompanied by an affidavit verifying the debt. The affidavit must:

• Be sworn before a Justice of the Peace or solicitor
• Set out the facts proving the debt is owed
• Exhibit copies of the invoices, contracts, or other evidence
• Confirm that the debt is due and payable

The statutory demand must be served personally on the company — typically by serving it at the company’s registered office or on a director. Service by post or email is not sufficient unless the company agrees in writing.

Once served, you must file an affidavit of service proving that the demand was properly delivered.

Common mistakes that invalidate a statutory demand

A statutory demand can be set aside if it contains a defect or is not properly served. Common mistakes include:

• Incorrect company name or ACN
• Demand for less than $4,000
• Demand for an unliquidated or disputed amount
• Failure to attach the affidavit verifying the debt
• Improper service (not served personally or at the registered office)
• Demand not in Form 509H or missing required information

Even a minor error can give the company grounds to apply to set aside the demand. Precision matters.

When to get a lawyer instead

A statutory demand is a serious step. If the debt is genuinely disputed, the company may apply to set it aside. If you proceed to wind-up proceedings, you will need legal representation.

Engage a solicitor if:

• The debt is disputed or the company has raised a valid offsetting claim
• The amount is complex or involves unliquidated damages
• The company has applied to set aside the demand
• You are considering wind-up proceedings
• The debt involves a contract with ambiguous terms or cross-claims

ClaimDone is designed for straightforward, undisputed debts where the invoices and evidence are clear. For more complex cases, a lawyer can assess whether a statutory demand is appropriate and represent you in any court proceedings.

How ClaimDone prepares your statutory demand

ClaimDone prepares Form 509H and the supporting affidavit template based on the evidence you upload. You complete a short intake form, upload your invoices and any contracts or correspondence, and the system generates the documents in under 60 minutes.

You receive:

• Completed Form 509H statutory demand
• Affidavit template ready to be sworn before a JP or solicitor
• Service instructions and next steps

The flat fee is $197. No subscription. No hourly billing. All states.

Once the documents are prepared, you are responsible for having the affidavit sworn and arranging personal service on the company. ClaimDone does not serve the demand on your behalf, but the service instructions guide you through the process.

If the company applies to set aside the demand or if you proceed to wind-up proceedings, you will need a solicitor. ClaimDone prepares the initial demand — it does not provide legal advice or represent you in court.

Final steps: serve the demand and enforce it

Once your statutory demand is prepared and the affidavit is sworn, you must serve it personally on the company. This typically means:

• Attending the company’s registered office and handing the demand to a director or company officer
• Engaging a process server to do it for you
• Confirming service by filing an affidavit of service

After service, the 21-day clock starts. Monitor the deadline carefully. If the company does not pay or apply to set aside the demand, you can file a wind-up application.

Most companies pay within the 21 days. The statutory demand creates real consequences, and most directors do not want their company presumed insolvent.

If the company does apply to set aside the demand, you will need to respond to the application and potentially attend court. At that point, engage a solicitor.

If a company owes you $4,000 or more and has stopped responding to your invoices, ClaimDone prepares Form 509H and the supporting affidavit template for $197. Upload your evidence, get your documents in 60 minutes, and serve the demand. Prepare your statutory demand now.

Frequently Asked Questions

Can I issue a statutory demand for less than $4,000?

No. The Corporations Act sets a minimum threshold of $4,000. If the debt is less, you cannot use a statutory demand. Consider a letter of demand or tribunal application instead.

What happens if the company disputes the debt?

The company can apply to the court to set aside the statutory demand within 21 days if there is a genuine dispute. If the court agrees, the demand is invalidated. That is why the debt must be clear and undisputed before you serve the demand.

Can I serve a statutory demand by email or post?

No. A statutory demand must be served personally on the company — typically at the registered office or on a director. Service by email or post is not valid unless the company agrees in writing.

What if the company ignores the statutory demand?

If the company does not pay or apply to set aside the demand within 21 days, it is presumed to be insolvent. You can then apply to wind up the company in the Federal Court or Supreme Court.

Do I need a lawyer to issue a statutory demand?

Not to prepare the initial demand. ClaimDone prepares Form 509H and the affidavit template for straightforward debts. If the company applies to set aside the demand or you proceed to wind-up, you will need a solicitor.