What to Do If Your Company Receives a Statutory Demand? – A Short Guide

If your company is served with a statutory demand, strict timeframes apply and immediate action is critical. You generally have the following options:

1. Apply to set aside the demand (within 10 working days)
If there is a genuine dispute about the debt, or other valid grounds under the Companies Act 1993, the High Court may set the demand aside. This application must be filed within 10 working days of service. Missing this deadline usually removes your ability to challenge the demand.

2. Pay the debt (within 15 working days)
If the debt is undisputed and the company is solvent, paying the amount owing within 15 working days will resolve the demand.

3. Negotiate a settlement (within 15 working days)
In some cases, it may be possible to reach a negotiated settlement with the creditor within the compliance period.

Why the deadlines matter
If the company does not comply with the demand within 15 working days, it is presumed to be insolvent under the Companies Act 1993. The creditor may then apply to the High Court to place the company into liquidation, with the application served at the company’s registered office.

Once a liquidation application is served, shareholders have only 10 working days to appoint a liquidator of their choosing. After that period, the Court will appoint the liquidator. In our experience, allowing the appointment decision to default to the Court rarely produces the best outcome for directors or shareholders, and may result in stricter outcomes including potential management banning orders.

Act early
If you receive a statutory demand, please contact us immediately. Early advice can materially affect the outcome and preserve available options. Where necessary, we can introduce you to experienced licensed insolvency practitioners to ensure you receive prompt and practical guidance.