Served with a statutory demand? Your 21-day plan

What is a statutory demand?

Think of it as the Corporations Act’s formal final warning. Once a company owes someone $4,000 or more, that creditor may serve this document and start a three-week countdown for the money to be paid or an arrangement agreed. Suppliers, landlords, subcontractors and the ATO all reach for it once invoices have gone stale.

The dollar figure is rarely the frightening part. What bites is what happens next: miss the deadline without paying, settling or challenging in court, and the law assumes the company can’t meet its debts. That assumption becomes the creditor’s main weapon in a petition to liquidate. For a business that is otherwise trading soundly, it’s a result worth nearly any effort to head off.

What should I do on the day it arrives?

1. Write down the date of service and count 21 days. Mark the deadline everywhere. Don’t count from when you first read it.
2. Read the demand carefully. Check the creditor, the amount, the invoices it relates to and any affidavit attached.
3. Call a solicitor today — especially if any part of the debt is disputed, incorrect or offset by money the creditor owes you.
4. Call the creditor (or their solicitor) to confirm the figure and ask whether they’ll accept payment or an agreed schedule.
5. Decide your path: pay, settle, or apply to set aside. Each needs action within the 21 days.
6. Line up funding early if paying is the plan.

The 21-day notice page lays out a day-by-day timeline that works for statutory demands, director penalty notices and bankruptcy notices.

How fast can funding pay a statutory demand?

Position	Route	What’s possible
Debt $20k–$250k, property available	Urgent caveat loan or second mortgage	Same day possible
Larger debt, property available	Second or first mortgage	Up to $5m possible within 24–48 hours
No property, trading well	Unsecured business loan	Typically $5,000 to $500,000; smaller amounts same day possible
Several creditors pressing	Property-secured consolidation	Clears multiple debts at once

Paying the creditor directly at settlement is common and gives you a clean paper trail to show the demand has been satisfied. Ask your solicitor to confirm in writing with the creditor that payment resolves the demand.

Should I pay, settle or dispute?

• Pay if the debt is genuine and you can fund it. It’s the simplest outcome.
• Settle if the creditor will accept a reduced amount or a schedule. Get the agreement in writing.
• Apply to set aside if there’s a genuine dispute, an offsetting claim or a defect in the demand. Your solicitor needs to file within 21 days of service.

If the company has broader debt problems beyond one demand, an adviser may suggest options such as small business restructuring, and our guide to calling creditors to buy time can help in the meantime. Borrowing to pay one creditor makes sense when the company is viable; it doesn’t make sense if it just delays an inevitable outcome.

Illustrative example: a landlord’s demand

Illustrative only. A Brisbane hospitality company falls four months behind on rent during a slow winter. The landlord serves a statutory demand for $72,000. The company disputes $8,000 of outgoings but agrees the rest is owed. Its solicitor negotiates with the landlord’s solicitor: the company pays $64,000 within the 21 days and the disputed outgoings are reviewed separately.

The director owns an investment unit with equity. A caveat loan of $80,000 — covering the settlement, legal costs and a buffer for next month’s rent — is possible the same day once the demand, ID and property details are provided. The landlord is paid directly and the demand is withdrawn.

What do lenders need for a statutory demand loan?

• The statutory demand itself, with the date of service.
• Confirmation of the payout amount from the creditor or their solicitor.
• Your solicitor’s details, so payment can be confirmed and the demand withdrawn.
• ID for directors, the company’s ACN and recent bank statements.
• Property details if offering security, and a short note on how the loan will be repaid.

Respond inside the window

Twenty-one days goes quickly once legal advice and paperwork are involved. Start a 60-second enquiry as soon as you know the amount you’ll need.

There’s no credit check when you first enquire. We don’t pass your situation around a crowd of lenders; one specialist looks at it and calls you. Tell us the date of service, the amount, whether any of it is disputed and what property is available — accurate details get the right answer the first time. Check what you can access.