JURISDICTION FILE
Under Section 459E of the Corporations Act, a Statutory Demand gives the debtor 21 days to pay or face a presumption of insolvency. No court hearing. No judgement required. Just a correctly served demand and a deadline. If the debtor fails to comply, you can petition to wind up the company. In Australia, that threat alone recovers most debts.
HOW WE COLLECT HERE
"The company is required within 21 days after service of this demand to pay to the creditor the amount of the debt, or to secure or compound for it to the creditor's reasonable satisfaction. Failure to comply will result in presumption of insolvency under section 459C(2)(a)."
Australia is one of the most creditor-friendly common law jurisdictions in the Asia-Pacific. The legal system is clear, courts are efficient, enforcement mechanisms are powerful, and debtors face serious consequences for non-payment.
The Statutory Demand under Section 459E of the Corporations Act 2001 is the most powerful B2B collection instrument in Australian law. Served on a company owing AUD 4,000 or more, it creates a 21-day deadline. Failure to comply creates a statutory presumption of insolvency.
Corporations Act 2001 s.459E · ACL · State court rules
Statutory Demand for debts over AUD 4,000. 21 days to comply or presumption of insolvency. Directors face personal liability under s.588G for insolvent trading.
A formal Letter of Demand specifying the amount, basis, and deadline (14-21 days) is standard practice and often a pre-condition for recovering legal costs. A well-drafted letter on Australian legal letterhead resolves a substantial percentage of commercial debts.
LETTER OF DEMAND
Pre-litigation notice
Australian legal letterhead. Specifies claim, interest, next steps. 14-21 day deadline.
STATUTORY DEMAND
Form 509H, s.459E
21 days. No court required. Presumption of insolvency if ignored.
WINDING-UP
Company liquidation
Petition filed in Federal or Supreme Court. Directors face personal liability.
GARNISHEE ORDER
Bank attachment
Court directs bank to pay debtor's funds directly to creditor.
Each state has its own monetary jurisdictions. In NSW: Local Court up to AUD 100,000, District Court up to AUD 750,000, Supreme Court above. Most states offer default judgement if the debtor fails to file a defence within 28 days.
Options include Writ of Execution (asset seizure by sheriff), Garnishee Order (directing banks to pay creditor), Examination Summons (compelling asset disclosure under oath), and Charging Order (securing against real property).
Directors who allow a company to incur debts while insolvent face personal liability, compensation orders, and potential disqualification under s.588G. This personal exposure means directors take Statutory Demands seriously.
Garnishee Order
Bank directed to pay creditor directly from debtor's funds.
Charging Order
Judgement debt secured against real property.
Examination Summons
Debtor compelled to disclose all assets under oath.
Writ of Execution
Sheriff authorised to seize and sell debtor's assets.
ENFORCEMENT PROTOCOL
On Australian legal letterhead. Specifying the claim, the statutory interest, and the next step: Statutory Demand or court proceedings.
DAY 0: Letter of Demand. On Australian legal letterhead. Specifying the claim, the statutory interest, and the next step: Statutory Demand or court proceedings.Served on the registered office under s.459E Corporations Act. 21 days. No court involved. Just a demand and a deadline.
DAY 21: Statutory Demand served (Form 509H). Served on the registered office under s.459E Corporations Act. 21 days. No court involved. Just a demand and a deadline.21 days expired. Under s.459C(2)(a), the company is presumed insolvent. The creditor prepares a winding-up application.
DAY 42: Presumption of Insolvency. 21 days expired. Under s.459C(2)(a), the company is presumed insolvent. The creditor prepares a winding-up application.A petition to liquidate the company is filed. Directors face personal liability for insolvent trading under s.588G.
DAY 50+: Winding-Up Petition / Enforcement. A petition to liquidate the company is filed. Directors face personal liability for insolvent trading under s.588G.On Australian legal letterhead. Specifying the claim, the statutory interest, and the next step: Statutory Demand or court proceedings.
DAY 0: Letter of Demand. On Australian legal letterhead. Specifying the claim, the statutory interest, and the next step: Statutory Demand or court proceedings.Served on the registered office under s.459E Corporations Act. 21 days. No court involved. Just a demand and a deadline.
DAY 21: Statutory Demand served (Form 509H). Served on the registered office under s.459E Corporations Act. 21 days. No court involved. Just a demand and a deadline.21 days expired. Under s.459C(2)(a), the company is presumed insolvent. The creditor prepares a winding-up application.
DAY 42: Presumption of Insolvency. 21 days expired. Under s.459C(2)(a), the company is presumed insolvent. The creditor prepares a winding-up application.A petition to liquidate the company is filed. Directors face personal liability for insolvent trading under s.588G.
DAY 50+: Winding-Up Petition / Enforcement. A petition to liquidate the company is filed. Directors face personal liability for insolvent trading under s.588G.FREQUENTLY ASKED
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