Often creditors and cannot secure payment of a debt against a company.
Many creditors will consider issuing a company with a statutory demand under section 459E of the Corporations Act 2001 (Cth), which requires a debtor company to pay a debt it owes within 21 days.
If the debtor company fails to pay the debt, come to a suitable arrangement with the creditor, or make an application to set aside the statutory demand within that time period, the company is presumed to be insolvent.
Once there is a presumption of insolvency, it is then open to the creditor to commence proceedings to wind up the debtor company and have a liquidator appointed.
However, there are many cases where a party has been punished with an adverse costs order for inappropriately issuing a statutory demand where a clear genuine dispute existed.
See Springdale Legal to obtain sound legal advice and choose an appropriate way to resolve disputes, particularly those which involve questions of fact and the meaning and effect of contracts.
