Statutory Demand

The Corporations Act defines a company as insolvent if it is unable to pay its debts as and when they fall due.

  • Have you received a statutory demand?
  • You have 21 days to act!
  • Your creditors then have 3 months to start Liquidation Procedures
  • You may be personally liable for company debts

A Statutory Demand (also known as Form 509H) is a claim made under 459E of the Corporations Act. Failure to comply with a Statutory Demand or apply to the Court to set a Statuory Demand aside will result in a company being “deemed” to be insolvent.

Creditor Statutory Demands are also know as CSDs, Stat Demands, Stat Notices. We will just use Statutory Demand.

The service and non-compliance with the Statutory Demand allows a creditor that issued the Statutory Demand to apply to the Court for the appointment of an official liquidator to the company.

The failure to comply with a Statutory Demand on the most common basis in which applications are made to the Court for the winding up of companies in Australia.

If you have received a Statutory Demand, you are required to pay a specified sum of money within 21 days from the date of the delivery of the statutory demand.

If you dispute the debt or there are irregularities with the document you have received, you should immediately seek independent legal advice and apply to the Court to set the demand aside on the basis that the debt, being the subject of the Statutory Demand, is genuinely disputed or there is an irregularity.

This application needs to happen within the 21-day period.

Recipients of a Statutory Demand need to act quickly if a statutory demand is served upon their company otherwise their company may be deemed insolvent and could face a Notice of Winding Up Application once the 21-day period expires.


The step following a statutory demand can be liquidation. Alternative the company or the shareholders will need to pay or come to an agreement with the creditor.

Going into Liquidation is very stressful and can lead to financial disaster for Directors and shareholders.

Paying a creditor following a Statutory Demand for disputed bills is frustrating and difficult.

If you do not act you risk:

  • Losing control of the company and business
  • The business being closed down or sold
  • Assets being be sold
  • Director loan and shareholder accounts being called in
  • Insolvent trading
  • Default with your financiers
  • Termination of leases by triggering insolvency clauses in your contracts;
  • Personal guarantees will be sought by creditors which may potentially require you to go bankrupt if the claims cannot be repaid


It is important that you explore all the options as every company has different circumstances and the right decision is vital to maximise your outcome. The earlier you act, the more options that will be available to you.

Our qualified staff use their extensive knowledge and experience to ensure you get the solution that is right for you. Do the stakeholders deserve that the business is given the best opportunity to survive?  We strive to deliver our clients with all the information and support that they need to make decisions on whether to liquidate the business.

As a director of a company there are risks of personal liability.  Assessing the options available for the business together with any personal liability risks allows for a more informed decision-making process.

In fact, whether a Statement of Claim has been issued or the company is just behind with its bills our qualified consultants will be able to explain your position and identify the specific solutions for you.