How long does a company have to respond to a statutory demand?

The company has 21 days from the date of service to either pay the debt in full or apply to a court to set aside the demand. Ignoring it is deemed an admission of insolvency.

What happens if a company ignores a statutory demand?

Failure to comply within 21 days creates a presumption of insolvency under the Corporations Act. The creditor may then apply to a court for the company to be wound up.

Can I use a statutory demand to recover money from a sole trader?

No. A statutory demand can only be issued against a company (Pty Ltd, Ltd). For sole traders and individuals, use a letter of demand or file in the relevant state tribunal.

Do I need an affidavit with a statutory demand?

Yes. Form 509H must be accompanied by a supporting affidavit verifying the debt, sworn before a Justice of the Peace or solicitor. Claim Done's statutory demand package includes guidance on preparing the affidavit.

Statutory Demand FAQ — Everything You Need to Know | Claim Done

Q: What is the minimum debt for a statutory demand?

The minimum is $4,000 under the Corporations Act 2001 (s459E). The debt must be a liquidated sum owed by a registered company — it cannot be used against individuals or sole traders.

Statutory Demand FAQ — Everything You Need to Know

What is a statutory demand?

A statutory demand is a formal legal notice under s459E of the Corporations Act 2001 (Cth) requiring a registered company to pay a debt within 21 days. Ignoring it creates a legal presumption of insolvency, giving the creditor grounds to apply for the company to be wound up.

Who can receive a statutory demand?

Only registered companies (Pty Ltd, Ltd). Statutory demands cannot be issued against individuals, sole traders, partnerships, or trusts. For non-company debtors, use a letter of demand followed by a tribunal application.

What is the minimum debt for a statutory demand?

$4,000 under s459E of the Corporations Act. The debt must be a liquidated sum (a specific amount) — not an estimate or unliquidated damages claim.

What form do you use?

Form 509H — the statutory demand must be in the prescribed form under the Corporations Regulations. It must be accompanied by a supporting affidavit verifying the debt, sworn before a Justice of the Peace or solicitor.

How do you serve a statutory demand?

Serve it on the company’s registered address as shown on ASIC’s company register. Registered post is recommended. The date of service starts the 21-day clock.

What does the company have 21 days to do?

Pay the debt in full, apply to a court to set the demand aside, or negotiate a payment arrangement (though there is no obligation on you to accept). If none of these happen, the company is presumed insolvent.

What if the debt is disputed?

If the debt is genuinely disputed, the company can apply to set the demand aside on that basis. If they succeed, you may be ordered to pay their legal costs. Do not issue a statutory demand for a disputed debt — use a letter of demand followed by a tribunal application instead.

Can I use a statutory demand to recover wages?

Yes, if the employer is a registered company and the amount owed (including superannuation) is $4,000 or more. The debt must be undisputed.

What happens after the 21 days?

If the company has not paid or applied to set the demand aside, you can apply to the Federal Court or relevant state Supreme Court for an order winding up the company. The presumption of insolvency makes this application relatively straightforward if the underlying debt is real.

Does a statutory demand guarantee I will get paid?

No. If the company has no assets, winding it up may not recover the debt. A statutory demand is most effective when the company has assets and genuinely owes the money — the threat of wind-up proceedings is powerful enough that most companies pay promptly.

How long does a statutory demand take?

Claim Done prepares the statutory demand within 60 minutes. Service takes 1–3 business days via registered post. The 21-day clock then runs from date of service.

Prepare your statutory demand — $197

What if the company disputes the debt?

If the company genuinely disputes the debt, they must file an application in the Supreme Court to set aside the statutory demand within 21 days of service. They cannot simply ignore it. If their application fails, the demand stands and you can apply to wind up the company.

Important: do not issue a statutory demand for a genuinely disputed debt. Courts can award costs against you if the demand is found to be an abuse of process.

What happens after 21 days if they do not pay?

If the company does not pay or apply to set aside the demand, you can file an application for the company to be wound up in insolvency. The 21-day non-compliance creates a rebuttable presumption of insolvency under the Corporations Act 2001 (Cth) — an extremely powerful legal position.

Do I need a lawyer to issue a statutory demand?

No. The demand must be in the prescribed form (Form 509H under the Corporations Regulations), but there is no legal requirement that it be drafted by a solicitor. Claim Done generates a compliant Form 509H and supporting affidavit for $197.

What is the minimum debt amount?

The statutory minimum is $4,000 (increased from $2,000 in April 2021). Debts below this amount cannot be the subject of a statutory demand.

Can I use a statutory demand against an individual?

No. Statutory demands under s459E of the Corporations Act can only be issued against registered companies (Pty Ltd or Ltd). For debts owed by individuals or sole traders, use a letter of demand and escalate to a tribunal.

Issue a statutory demand today — Form 509H generated for $197