Question

Assume a debtor has issued a statutory demand to Mask R Us Pty Ltd for the non-payment of a $10,000 debt.

Explain, with reference to the Corporations Act, the legal options available to the company in responding to the statutory demand and the legal consequences of ignoring the statutory demand?

Answer 1

Answer:-

• Under section 459 G OF THE Corporations Act 2001(Cth),the company may file an application to set aside the statutory demand.
• If Mask R Us Pty Ltd believes that the statutory demand is not valid,they can go to court to have it set aside within 21 days of receiving the demand notice.
• Under section 459 E of the corporations Act 2001(Cth),a creditor may serve a company a statutory demand relating to a debt that the company owes which is due and payable,if this demand is unsatisfied the creditor may make an application for an order to wind up the company.
• If Mask R Us Pty Ltd does not comply with the statutory demand by paying the debt or does not apply to the courts to have it set aside within 21 days,it is presumed that the company does not have the ability to pay its debts when they fall due and is therefore insolvent.