What happens during the 21-day period?
In short
Once served, the company has 21 days to either pay the debt, reach an agreement with the creditor, or apply to the court to set the demand aside. The period is strict and generally cannot be extended, so a debtor company must act quickly.
The 21-day period is the heart of the statutory demand process. What the company does (or fails to do) in this window determines what happens next.
The company's options
- Pay the debt in full.
- Reach an arrangement with the creditor (for example, a payment plan).
- Apply to set the demand aside — this application must be made and served within the 21 days.
The deadline is strict
The 21-day period generally cannot be extended, and the deadline to apply to set the demand aside is applied strictly by the courts. Missing it has serious consequences.
Do not use a statutory demand for a genuinely disputed debt. If the debtor disputes the debt on genuine grounds, or has an offsetting claim, a statutory demand can be set aside and cost orders may follow. If in doubt, seek advice before proceeding.
References
- Corporations Act 2001 (Cth) — incl. s 459E (statutory demand)
- Corporations Regulations 2001 — prescribed form and statutory minimum
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