01
Blog
01
Blog
Published: 2 May 2025
Last Updated: 18 August 2026
Categories
When a creditor wants to formally demand payment against a company for an unpaid debt, they can serve a statutory demand on that company. A statutory demand is a powerful legal document that the debtor company must respond to lest it faces serious consequences. Failure to comply with its obligations can be used as evidence that the business is insolvent, which may lead to the risk of liquidation proceedings.
If a debtor company is properly served a statutory demand, it has a few options: satisfy the issuer’s demands, settle on an agreement with the creditor, look into restructuring or liquidation, or apply for a dispute to set aside the demand.
The debtor company only has 15 working days to comply with the statutory demand and pay the debt or 10 working days to file an application to set aside the statutory demand with the High Court disputing the creditor’s demand.
If your company receives a statutory demand, it is essential to act fast—whether you choose to pay the costs you owe, compromise on payments, restructure your company, or challenge the amount demanded.
If your company is served a statutory demand, how you deal with it depends on which category your company falls in. Either you can pay, you can’t pay, or you won’t pay.
I’ll start with the easiest. If you can pay the debt owed to the creditor, you should repay it, and that will resolve the situation.
If you can’t pay the owed money, you need to get some specialist legal advice, as the timeframes move very quickly.
Once your company has been served a statutory demand, you have 15 working days to pay the creditor. If you don’t pay, the creditor is entitled to then file a liquidation application at the High Court.
If you want to dispute the statutory demand, you have 10 working days to do so, and you need to do that formally by making an application to set the statutory demand aside at the High Court.
So, if you can’t pay, you might want to look at negotiating a settlement, coming to some arrangement with the creditor that aligns with your cash flow and satisfies their expectations.
However, if that isn’t possible, you need to move very quickly and look at other options, such as the restructuring or liquidation process.
Now, if you won’t pay the statutory demand, it’s usually because you have a dispute to set aside the notice.
For example, it’s very common for creditors to issue a statutory demand in the construction industry. But if the debtor company has issues with the workmanship or the quality of the service, or if the creditor has overclaimed their demand, there could be a basis for a substantial dispute.
In that case, you have 10 working days to file a dispute application at the High Court after being served a statutory demand.
And if you don’t file a High Court Application, there is a statutory assumption that your company is insolvent and unable to pay the debts—and can be liquidated as a result.
No matter what strategy we’re talking about, there is a clear theme across them all. You need to be proactive when you’re issued a statutory demand notice.
Doing nothing is the worst possible strategy that we see, and it’s the most common strategy adopted by business owners of debtor companies. If you receive a statutory demand and are unable to pay, the first step is to talk to an experienced liquidation lawyer. Book a free 30-minute consultation with the experts at Norling Law now.
02
Author Profile
Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.
03
Related Articles
Book a free consultation to get clarity on your options and next steps
We’ve been guiding people through times of uncertainty since 2015. Talk to us for free to see what we can do for you.
