Receiving a statutory demand is a serious matter.
Legally it means if you (the debtor company) do not dispute the demand within 10 working days, or pay the demand within 15 working days, you are presumed to be insolvent and the creditor can apply to the court to place your company into liquidation.
What steps should you take in the event that you receive a statutory demand?
STEP ONE:
Firstly, you need to determine whether you owe the debt or not. If you have a genuine reason to dispute the debt, then you must take action. Do not ignore the notice; secure legal advice immediately.
STEP TWO:
1) If you do not owe the debt:
You must oppose the statutory demand. This must be done by an application to the High Court — not by a phone call or email to the creditor. So, take legal advice immediately. Remember, you only have 10 working days to dispute the debt.
2) If you do owe the debt:
Can you pay? If so, pay it.
If not, urgent steps need to be taken as options may be available to you depending on your position including:
1) debt refinancing
2) creditor compromises
3) voluntary administration
4) or voluntary liquidation
The team at Gerry Rea Partners can provide guidance on any of these options, please contact us for a free, no obligation consultation. Call 0800 343 343 or email mkemp@gerryrea.co.nz