A statutory demand is a legal document issued under section 289 of the Companies Act 1993, by a creditor to a company who is owing a debt. There are four key points to consider before issuing a statutory demand.
A statutory demand must include the following;
- be in respect of a debt that is due and is not less than the prescribed amount; and
- be in writing; and
- be served on the company; and
- require the company to pay the debt, or enter into a compromise with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service.
Why issue a Statutory Demand?
Issuing a statutory demand can be an easy, efficient and a low stress process. It is important to have a lawyer involved as there are strict requirements to be met. By issuing a statutory demand, we can help you to enforce the recovery of outstanding debts owing to you as the creditor and/or business.
How do I issue a Statutory Demand?
The process of issuing a statutory demand is a straightforward exercise for the team here at Carlile Dowling. We will work with you to go through the stages of this to ensure we have everything we need to proceed.
One of the first steps of issuing a statutory demand is ensuring that the amount owing is equal to or greater than $1,000.00 NZD and that the debt exceeds the value of any security by at least $1,000.00 NZD.
Secondly, there must not be any prior and/or current dispute about the any aspect of the debt itself. The Courts can punish companies who issue statutory demands for disputed debts. We will help to ensure this doesn’t happen to you.
Lastly, the statutory demand must not be made prior to the due date for payment of the debt.
What Next?
We will issue and serve the statutory demand and the rest is in the hands of the debtor who has 15 working days from date of service to:
- pay the debt in full; or
- secure the debt; or
- enter into a compromise with the creditor. Again, we will guide you through this process if the debtor opts to enter into a compromise.
If after expiry of the 15 working days the debtor fails to respond to the statutory demand and/or does not pay the debt in full, you then have 30 working days to make an application to the High Court to liquidate the company.
The debtor also has the right to dispute the statutory demand by submitting an application to the High Court to set aside the statutory demand. This application must however be submitted within 10 working days from date of service of the statutory demand.
How can we help?
At Carlile Dowling, we have a vast amount of experience of issuing and guiding clients through the process of a statutory demand. We are here to help. Please visit our website to see our Insolvency Law Team or contact Richard Natusch on (06) 835 9367 or email at richard@cardow.co.nz
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