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The 21-day clock is ticking. Whether you’ve been served or you’re considering issuing one, Boss Lawyers moves fast when time is critical.
At Boss Lawyers, we regularly act for both companies defending statutory demands and creditors issuing them. We have handled matters involving construction disputes, deceased estates, commercial debts, and complex corporate structures — often under extreme time pressure. That is our standard operating procedure.
If you have been served with a statutory demand, or you are a creditor considering issuing one, call us on 1300 267 711. Time is critical.
If you are reading this because you have just been served, here is what you need to understand immediately.
The deadline under s459G of the Corporations Act 2001 is not flexible. Courts have consistently refused to extend it, regardless of the circumstances. Whether you were overseas when it arrived, whether your accountant was on leave, whether you thought it was a bluff — none of that matters. The 21 days run from service, and once they expire, you cannot apply to set the demand aside.
When a director calls us about a statutory demand, we immediately work through three questions to determine the strategy:
This triage determines the entire approach. Under s459H of the Corporations Act 2001, if there is a genuine dispute about the existence or the amount of the debt, you have grounds to apply to set the statutory demand aside.
This is one of the most important practical lessons we can share. We have seen it too many times: a director receives a statutory demand, believes they can resolve the matter through negotiation, and puts off preparing the court application. Then negotiations stall or break down with only days left on the clock.
Our approach is straightforward: always proceed on the basis that negotiations will fail. If they succeed, you have lost nothing except the cost of preparation. If they do not succeed, you are already positioned to file compelling evidence within the deadline. We call this the parallel track principle, and it has saved more than one client from a very difficult position.
Our commercial litigation lawyers have extensive experience resolving complex disputes. Here are examples of how we’ve helped clients.
A company received a statutory demand for several hundred thousand dollars relating to a deceased estate.
Our Approach:
We filed an application to set aside the statutory demand under s459G, arguing there was a genuine dispute as to both the existence and amount of the debt. We prepared and filed extensive evidence supporting the genuine dispute. The creditor withdrew the statutory demand after the application was filed. The matter resolved without ever reaching a hearing.
A Brisbane builder was served with a statutory demand by a subcontractor. The amount appeared to be owed.
Our Approach:
Our investigation identified that the subcontractor potentially did not hold the appropriate QBCC licence class to carry out the scope of work performed. Under s42 of the QBCC Act, a person who carries out building work without the appropriate licence is not entitled to recover payment. We built an arguable case that there was a genuine dispute as to the very existence of the debt.
A statutory demand is a formal written demand served on a company under section 459E of the Corporations Act 2001 (Cth). It is the first step in the statutory process that can ultimately lead to a company being wound up — placed into liquidation — by order of the court.
To be valid, a statutory demand must:
A statutory demand is not a court proceeding in itself. It is a formal notice that triggers a presumption of insolvency under s459C(2) of the Act if the company fails to comply within 21 days.
For more information on the broader insolvency framework, see our page on insolvency lawyers Brisbane.
The primary mechanism for challenging a statutory demand is an application under s459G of the Corporations Act 2001. This application must be filed and served within 21 days of the demand being served on the company.
Under sections 459G, 459H and 459J of the Act, a court may set aside a statutory demand on the following grounds:
A genuine dispute does not mean you need to prove you will win the underlying case. The threshold is lower than that. As established in cases such as Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, a genuine dispute exists where the court is satisfied that there is a “plausible contention requiring investigation.”
However — and this is critical — you must support your position with evidence. The application is not an opportunity to make bare assertions. The supporting affidavit material needs to be detailed, specific, and compelling.
We cannot stress this enough: do not let the 21-day deadline expire.
If a company fails to comply with a statutory demand within 21 days — by paying the debt, reaching a compromise, or filing a successful s459G application — then under s459C(2) of the Corporations Act 2001, the company is presumed to be insolvent.
Once the 21 days expire, you lose the ability to argue that there was a genuine dispute about the debt entirely. Your only remaining option at the winding up hearing is to rebut the presumption of insolvency by leading evidence that the company is, in fact, solvent.
Proving solvency is not a matter of producing a letter from your accountant. Courts require comprehensive evidence, which typically includes:
A statutory demand is not only a defensive problem. For creditors, it is one of the most effective debt recovery tools available under Australian law.
A statutory demand is appropriate when:
If you are considering issuing a statutory demand, it must be done correctly. The demand must:
If a statutory demand is not set aside, not paid, and not compromised, the next step for the creditor is a winding up application filed in the Federal Court of Australia or the Supreme Court of Queensland.
The consequences of a winding up order are severe:
Statutory demand matters are urgent by nature. Every matter starts with a hard deadline and works backward from there. That is how we operate.
DUAL PERSPECTIVE
We act on both sides — defending and issuing statutory demands. That dual perspective gives us a significant practical advantage in every matter.
PARALLEL TRACK APPROACH
We prepare for court while pursuing negotiation. We never let the 21-day deadline pass while waiting for talks to conclude.
For expert legal advice and practical outcomes
A statutory demand is a formal notice served on a company under section 459E of the Corporations Act 2001 (Cth) requiring the company to pay a debt that is due and payable. If the company does not comply within 21 days, a presumption of insolvency arises, and the creditor can apply to have the company wound up. The debt must exceed $4,000.
You have 21 calendar days from the date the statutory demand is served on your company. Within that period, you must either pay the debt, reach a compromise with the creditor, or file and serve an application under s459G of the Corporations Act 2001 to set the demand aside. This deadline is absolute and cannot be extended by the court.
A genuine dispute exists where there is a real question to be determined about the existence or amount of the debt claimed. You do not need to prove you will win the underlying dispute — only that there is a plausible contention requiring investigation. The dispute must be supported by evidence; bare assertions are not sufficient. If a genuine dispute exists, the court must set aside the statutory demand under s459H(1)(a).
Yes, and we strongly recommend it. However, you must prepare the s459G application simultaneously. The 21-day deadline does not pause while negotiations are underway. If negotiations succeed, you can discontinue the application. If they fail, you are already prepared. We call this the parallel track approach, and it is the safest way to protect your position.
If you do not comply with a statutory demand within 21 days, your company is presumed to be insolvent under s459C(2) of the Corporations Act 2001. The creditor can then apply to the court to have your company wound up. At that hearing, you cannot argue there was a genuine dispute about the debt — that right was lost when the 21 days expired. Your only remaining defence is to prove the company is solvent, which requires comprehensive financial evidence.
The cost varies depending on the complexity of the matter, the nature of the dispute, and the volume of evidence required. Some matters resolve quickly — particularly where strong evidence of a genuine dispute causes the creditor to withdraw the demand. Others proceed to a contested hearing. We provide clear cost guidance after the initial assessment. Contact Boss Lawyers on 1300 267 711 to discuss your specific situation.
This is general information only and is not legal advice. You should obtain specific legal advice about your particular circumstances from a qualified legal practitioner.
If you need expert legal advice on statutory demand matters, our experienced team is here to help. We also handle contract disputes, professional negligence claims, and franchise disputes. Contact Boss Lawyers on 1300 267 711 or request a consultation online. We offer clear, practical advice focused on achieving the best outcome for your business.
