Recently, a pizza shop operator came to see me about a large debt that his former electricity and gas provider was pursuing and the matter had already been in Court! He didn’t understand what it was all about and wanted it explained to him and dealt with. All he knew was that he changed providers and asked for a final bill from the previous provider.
After searching through his documents I established the following:
* He was operating the business through a company and he was the sole director.
* A statutory demand under section 459E of the Corporations Act 2001 giving the company 21 days to pay a debt of $10,000.00 was served on the company, failing which the provider was entitled to apply to a Court to wind up the company i.e. to place it into liquidation.
* The 21 day period passed without the operator taking any action and now the matter was before the Court and the provider wanted its debt paid immediately plus $8000.00 in legal costs to drop the proceedings!
The operator was caught between a rock and hard place. His inaction meant he risked losing his business. He should have sought legal advice much earlier but did not did not appreciate the seriousness of his position.
If your company receives a statutory demand, it must take action within the 21 day period by either paying the debt in full, negotiating a payment plan or applying to the Court to set aside the statutory demand for various reasons like a dispute over the debt amount or as to whether there is a debt at all.
May 2026