Statutory Demand

What Is a Statutory Demand?

A Statutory Demand is an official document, initiated by a creditor, requesting payment of an outstanding debt by the debtor. Payment is normally required within 15 working days from when the request has been served, unless disputed or other arrangements have been made.

It is an official document, and often may be a preceding step in the process of initiating the liquidation or wind up of a business.

The minimum debt required to issue a Statutory Demand is $1,000.

The Statutory Demand Document

A Statutory Demand is issued under the New Zealand Companies Act 1993, Section 289.

The Statutory Demand document contains all the key information relating to the circumstances of debt including:

• Description of the debt
• Amount owing, any previous payments made
• Payment/settlement options
• Payment timeframe
• Creditor’s name and contact details

Initiating a Statutory Demand | Key Facts

You have the right to initiate a Statutory Demand on any company that has an outstanding debt of $1,000 or more. The Statutory Demand is an official document, and therefore needs to be served in the appropriate way. This includes serving it directly to the business at their registered office address.

Once issued, the recipient of the Statutory Demand does have the right to challenge or dispute the debt, and this needs to be done within 10 working days.

Ideally, the recipient of the demand will then make contact, provide full payment, or negotiate a part payment or other acceptable agreement.

If no contact is made, you as the creditor, have full right to progress legal proceedings, which generally includes seeking liquidation or winding up of the company.

Receipt of a Statutory Demand | Key Facts

If you are served a Statutory Demand, you do have a number of options to consider. Most importantly, you have 15 working days to either pay the debt or negotiate a settlement that is agreeable to both parties.

Your options include:

• Making payment in full, where possible, if the debt is not being disputed.
• Making a part payment and/or negotiating a repayment schedule.
• Providing some level of ‘security’ as part of a repayment approach.
• Challenging the issued Statutory Demand through legal proceedings. This needs to be undertaken within 10 working days of the served document.

If you choose not to respond to the Statutory Demand, this leaves the creditor with minimal options. The most likely outcome is that the creditor may choose the next legal option to them, which is initiating formal procedures at the High Court, placing your business into liquidation.

How We Can Help

With our considerable experience we can help you with all aspects of the Statutory Demand process.

• We understand the legal requirements, the strict timelines, and range of options regarding issuing and/or receiving a Statutory Demand.
• We can assist and advise you on the best options regarding your financial circumstances, cashflow, and your assets/liabilities.
• We can draft and complete the Statutory Demand document for you and arrange that it is served correctly to the Debtor.
• If you are the creditor, seeking payment of an outstanding debt, we can assist with determining the full amount outstanding, suitable payment options, and develop the appropriate supporting documents regarding your Statutory Demand.
• If you are the debtor, receiving the issued Statutory Demand, we can assist you with identifying your most appropriate payment / cashflow options, or other suitable remedies for negotiating with the named creditor.