A statutory demand can be a powerful legal tool, but it’s also a serious threat if you receive one. Whether you’re a creditor chasing unpaid debts or a company director trying to defend your business, understanding how statutory demand lawyers operate is essential. Knowing how these professionals play a pivotal role in navigating the tight deadlines and legal intricacies of the statutory demand process, might be the difference between losing or saving your business.
What Statutory Demand Lawyers Do
Statutory demand lawyers help clients use and respond to statutory demands, which are formal requests for payment issued under the Corporations Act. Their expertise lies in making sure that demands are legally compliant, timely, and strategically beneficial. Here’s how they help:
Issue Statutory Demands
Lawyers assist creditors in drafting and serving statutory demands. This involves ensuring the debt is due and payable, the amount is above the statutory threshold, and all required documents (like affidavits) are correctly prepared. A poorly written demand risks being set aside, so professional guidance is critical. Statutory demand lawyers also advise on the best timing to issue the demand, especially when it can be used as a negotiation tool or precursor to legal enforcement.
Statutory demands must strictly comply with legal formatting, and even minor clerical errors can render them void. Lawyers carefully review supporting documentation and help ensure affidavits of debt are correctly sworn, making the demand harder to challenge.
Set Aside or Defend Statutory Demands
If your company receives a statutory demand, you typically have 21 days to respond. Statutory demand lawyers can apply to the court to set it aside on grounds such as a genuine dispute over the debt or a defect in the demand. Any applications to disallow the demand must be made promptly and properly supported with evidence. Lawyers can also help gather financial documentation, witness statements, and expert opinions to support the defence.
Another crucial role lawyers play is determining whether the company truly owes the claimed amount. If any part of the debt is reasonably disputed, the court may set the demand aside. Lawyers can also identify defects like vague wording, lack of proper supporting documentation, or incorrect service.
Advise on Insolvency Risks
Statutory demands often trigger concerns about insolvency. Lawyers are able to assess a company’s financial position, advise directors on their legal obligations, and help avoid breaches of duty. They can also identify risks of trading while insolvent and recommend proactive strategies. This might include seeking finance, restructuring debts, or voluntarily appointing an administrator or liquidator to preserve business viability.
Directors face personal liability if they allow a company to trade while insolvent. Lawyers not only help interpret financial data but also guide directors on documenting solvency assessments, preparing board resolutions, and maintaining compliance.
Negotiate Settlements
In many cases, disputes can be resolved before court action. Statutory demand lawyers help negotiate payment plans, debt compromises, or withdrawal of the demand. Their negotiation skills can save time, money, and reputational damage. By facilitating a dialogue between parties, they often prevent legal escalation and maintain commercial relationships.
Lawyers also structure settlement agreements with enforceable terms that protect the creditor’s position if the debtor defaults. This might include security interests, staggered payments, or consent orders filed with the court.
Court Representation
If matters escalate, lawyers can represent clients in Federal or Supreme Court proceedings. Whether you’re challenging a demand or enforcing one through a winding-up application, having experienced legal representation is essential for compliance and strategy. They also assist with preparing affidavits, attending directions hearings, and presenting evidence during court appearances.
Lawyers help manage procedural deadlines, cross-examine witnesses, and argue the case before judges, ensuring that legal arguments are clearly made and that clients are not caught out by technicalities.
When You Need a Statutory Demand Lawyer
You don’t need to wait until things spiral out of control. Statutory demand lawyers provide value at various stages of the debt collection or defence process, for both creditors and debtors.
As a Creditor
If you’re owed money by a company that refuses to pay, a statutory demand is a powerful way to prompt action. A lawyer ensures the demand is legally enforceable and won’t backfire. They can also prepare for next steps if the demand is ignored, including filing for winding-up. Engaging a lawyer also ensures procedural compliance and protects you from allegations of improper conduct.
Lawyers also assess the commercial reality of enforcing payment. They review debtor financials (if available), negotiate security interests or guarantees, and evaluate whether winding up is a commercially viable solution.
As a Debtor
If your business receives a statutory demand, immediate legal advice is crucial. Statutory demand lawyers will assess whether the demand is valid and whether you have grounds to set it aside. They can also help you negotiate terms or prevent a court application that could lead to insolvency. A skilled lawyer may even assist in mediating payment arrangements that avoid formal litigation altogether.
They also assess if your company is truly insolvent or just facing temporary cash flow issues. If needed, they can work with insolvency practitioners to prepare for voluntary administration or restructuring to keep the business afloat.
Why Acting Quickly Matters
The statutory demand process is time-sensitive. You usually have just 21 days to respond, after which the company is presumed insolvent. Failing to act in time can lead to a winding-up application and serious legal consequences. Statutory demand lawyers help ensure no deadlines are missed, no rights are waived, and your best interests are protected. They also guide you through documentation and strategy sessions during this critical period.
Time is of the essence. Many statutory demand applications fail not because of weak arguments, but because deadlines are missed or incorrect procedures followed. Engaging a lawyer from the outset ensures you’re not caught out by hidden pitfalls.
Conclusion
Whether you’re issuing a demand or responding to one, statutory demand lawyers provide crucial support in a fast-paced legal environment. They help you avoid costly mistakes, understand your rights, and act decisively. From drafting demands and negotiating settlements to court representation and insolvency guidance, their expertise is indispensable.
If you’re dealing with a statutory demand, don’t leave it to chance, consult an experienced statutory demand lawyer right away.
Need help with a statutory demand? Stonegate Legal’s experienced statutory demand lawyers are ready to assist creditors and debtors across Australia. Call them today for advice.
visit our website : https://stonegatelegal.com.au/statutory-demand/