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.

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.

What Is a Statutory Demand? Australian Law Explained | Claim Done

What Is a Statutory Demand? Australian Law Explained

A statutory demand is a formal legal notice issued to a registered company requiring it to pay a debt within 21 days, under section 459E of the Corporations Act 2001 (Cth). It is the most powerful debt recovery tool available to creditors — because ignoring it triggers a legal presumption of insolvency.

How it works

The creditor serves Form 509H on the company’s registered address
The company has 21 days to either pay in full or apply to a court to set the demand aside
If the company does neither within 21 days, it is presumed insolvent under s459C of the Corporations Act
The creditor may then apply to the Federal Court or relevant state Supreme Court to wind the company up

Requirements for a valid statutory demand

Minimum debt: $4,000 — the debt must be at least $4,000 (as of the current threshold set under the Corporations Act)
Company debtor only — the debtor must be a registered company (Pty Ltd, Ltd). Statutory demands cannot be used against individuals or sole traders.
Liquidated sum — the debt must be for a specific, ascertained amount. Unliquidated damages claims (e.g. where the amount is still disputed) are not appropriate.
Supporting affidavit — the demand must be accompanied by an affidavit verifying the debt, sworn before a Justice of the Peace or solicitor
Correct form — must be issued on Form 509H

How to serve a statutory demand

Serve the demand on the company’s registered address as shown on ASIC’s company register. You must serve both the Form 509H and the supporting affidavit together. Do not send by email alone — registered post or personal delivery is required for proper service.

What can the company do in 21 days?

Pay in full — the demand is satisfied and no further action is needed
Negotiate a settlement — you may accept partial payment, but get any agreement in writing
Apply to set aside — the company can apply to a court to set aside the demand if the debt is genuinely disputed, if there is an offsetting claim, or if the demand does not comply with the Corporations Act requirements

Statutory demand vs letter of demand

A letter of demand can be sent to anyone — individual or company — but carries no presumption of insolvency if ignored
A statutory demand can only be sent to a company, for $4,000+, but carries the threat of winding up — which is why it is vastly more effective for corporate debts

When NOT to use a statutory demand

Do not issue a statutory demand if the debt is genuinely disputed. If the company successfully applies to set it aside on the basis that the debt is disputed, you may be ordered to pay their legal costs — which can be substantial.

Prepare your statutory demand — $197

Claim Done prepares Form 509H and the supporting affidavit template, ready for service on the company. Start your statutory demand — $197.