Setting aside Statutory Demands

Statutory demands

If ignored, a statutory demand can be a death sentence for your company.

If you don't pay the debt or apply to a court within 21 days, your company is presumed insolvent and may be liquidated. Act now!

What is a statutory demand?

A creditor's statutory demand for payment of a debt (Form 509H) is the corporate equivalent of a bankruptcy notice. It requires a company to pay a debt within 21 days or apply to a court to set the demand aside. A company that does neither will be presumed insolvent and the creditor will then be able to issue winding up proceedings. Click here for more information about issuing a statutory demand.

From our files

Assessment $350 + GST

If you dispute the debt or believe you have an offsetting claim against the creditor, we will review the situation and advise you of your chances of having the demand set aside.

Negotiated settlement $3,000 + GST

We will:

  • prepare an affidavit explaining why the demand should be set aside; and
  • before incurring court fees, send a copy to your creditor and invite them to withdraw the demand.

If your affidavit raises a genuine dispute, a sensible creditor will withdraw the demand to avoid the risk of paying your legal costs.

Court hearing $3,000 + GST

If the matter is not resolved by negotiation, we will:

  • file your application and supporting affidavit at the Supreme Court of Western Australia;
  • attend one directions hearing;
  • prepare written legal submissions; and
  • prepare for and represent your company at the court's hearing of your application.

If you succeed, the court will usually order the creditor to pay your legal fees assessed by reference to the court's scale.

Quoted fees do not include court filing fees ($1,085 / $2,113), company searches ($20 per search) and any other disbursements.

For full terms refer to our Product Disclosure Statement.

Jeremy Birman

Jeremy Birman

9220 4480

Why we are here

Frequently asked questions

When can I apply to set aside the demand?

You must file and serve your application on the creditor within 21 days of receiving the demand. There is no way to extend this deadline.

On what grounds can I challenge a demand?

You may be able to challenge a demand if:

  • you dispute you owe the creditor the money;
  • the creditor owes you money (i.e. an offsetting claim);
  • if the demand is defective and that defect results in a substantial injustice (for example, the demand does not clearly state the amount you must pay); or
  • for some other reason (for example, the demand is an abuse of process).

When should I contact you?

Immediately. If you don't pay the debt within 21 days or apply to the court to set it aside, you cannot later challenge the demand.

The sooner you contact us, the more options we will be able to offer you. Whilst we will always do our best to help you, it takes time to prepare a court application. If you delay, we may not be able to assist you.

Can I prepare the application myself?

No, the court rules require a company to be represented by a lawyer. Further, the law in this area is very technical and minor mistakes can be fatal to the application.

Can I recover my costs from the creditor?

You will usually be entitled to an order that the creditor pay your costs if you are successful in setting aside the demand. These costs are assessed in accordance with a legislative scale and are usually less than what you pay us.

If the demand is set aside, is the debt extinguished?

No. If you successfully set aside the demand, it is open for the creditor to commence court proceedings against you in the usual way. In an application of this sort, the court is only looking at whether there is a genuine dispute or a genuinely asserted offsetting claim – it does not finally decide who is right.

What happens if a liquidator is appointed to my company?

The liquidator is required to act in the interests of the creditors. He/she takes control of the company and its assets and manages its affairs without reference to the directors. He/she will sell the assets and may pursue any of the company's claims against others – including its directors! The liquidator's fees are payable from the company's assets. The liquidator must lodge a report with ASIC as to the company's affairs. Ultimately, the company will be deregistered.