Statutory Demand Ignored: What Actually Happens Next

You served a statutory demand on a company that owes you money. The 21-day compliance period has passed. Nothing has happened — no payment, no application to set aside, no contact. This silence is not a defeat. Under the Corporations Act 2001 (Cth), a debtor company that fails to comply with a statutory demand is presumed insolvent — and that presumption opens the door to the most powerful enforcement step available against a corporate debtor.

The legal mechanism

Section 459C of the Corporations Act 2001 provides that if a company fails to comply with a statutory demand within 21 days of service, it is presumed insolvent. Section 459P then allows you (as a creditor) to apply to the Federal Court of Australia or the Supreme Court of your state for a winding-up order. The presumption of insolvency is rebuttable, but the burden shifts squarely to the company. To rely on the presumption, the application must be filed within three months of the failure to comply.

Common pushbacks and why they fail

• “We’ll pay next week.” Once the 21 days have lapsed, late payment doesn’t restore the company’s position — the presumption of insolvency is already enlivened.
• “We dispute the debt.” The time to dispute was within the 21-day window via a Form 519 application to set aside the demand. After that, dispute arguments are largely too late.
• “We didn’t receive the demand.” Service rules under section 109X are strict but well-defined; properly served demands are difficult to dodge.
• “Winding up is too extreme.” Courts grant winding-up orders routinely once the presumption is established and procedure has been followed.

What happens once you file

The court application is filed, served on the company and on ASIC, and gazetted. Other creditors may join. If the order is granted, a liquidator is appointed, the company’s assets are realised, and creditors are paid in priority order. The mere act of filing — and the public gazettal — often produces full payment within days, because directors and other creditors react fast to imminent liquidation.

What the document does

A Tribunal/Court Application package prepares the originating process for winding up under section 459P, the supporting affidavit verifying the demand and non-compliance, the consent of liquidator (often a standard appointment), and the schedule of supporting documents. It is the formal court document, not just a letter.

Getting help with the application

Claim Done does not prepare winding-up applications. The application is filed in the Federal Court or a state Supreme Court, so get legal advice before you file.

What happens after

The application is filed in the Federal Court or your state Supreme Court. A first return date is allocated. The company may pay in full before the hearing to avoid liquidation. If not, the court makes the winding-up order and a liquidator takes carriage.