Statutory demand

A statutory demand is served on a debtor company by a creditor, requiring the company to pay an outstanding debt within 21 days. Failure of the company to comply with a statutory demand by either paying the debt or applying to have it set aside is considered a prima facie act of insolvency, which then allows the creditor to commence proceedings to wind up the company.

Section 459E of the Corporations Act 2001 (Cth) determines the grounds for when a creditor may serve a statutory demand on a company. The debt must be over $2,000, due and payable (not prospective, contingent, or unliquidated), and calculable. Multiple debts can be combined to issue a singular statutory demand for payment.

Form 509H is the relevant template for a statutory demand. If the demand does not meet formal requirements, it will not have a legal bearing on the debtor, e.g. if there is a defect in the demand which would cause substantial injustice if it were not set aside.