Newsflash: threshold for statutory demands raised

By Scott Butler, Katherine Payne and Georgia Gamble

In another move to protect small business owners, the Federal Government has permanently raised the minimum debt required to serve a statutory demand from $2,000 to $4,000, effective today.

The increase was introduced by the Corporations Amendment (Statutory Minimum) Regulations 2021 (Cth) (Regulations). The new threshold applies to all statutory demands served on or after 1 July 2021. The 21-day period to comply with a statutory demand remains unchanged.

A statutory demand is a creditor’s formal, written request under the Corporations Act 2001 (Cth) requiring a company to pay a debt. A failure to respond to a statutory demand gives rise to a rebuttable statutory presumption of insolvency. It is common for a creditor to rely on the failure to comply with a statutory demand as a basis to file an application with the court to wind up a company in insolvency.

Notwithstanding the increased threshold, other cost-effective options remain for creditors seeking to recover debts of less than $4,000.

Hall & Wilcox presents a wealth of experience, industry knowledge and strong technical skills when it comes to issues of insolvency and debt recovery.


Scott Butler

Scott is a leading commercial dispute resolution lawyer with over 25 years' experience in restructuring and insolvency.

Katherine Payne

Katherine is an insolvency and commercial litigation specialist with a focus on the PPSA and its implications.

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