Debt Recovery: Statutory Demands
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DISCLAIMER:
While the letters below are based on actual cases and clients, any resemblance or similarities to any persons either living or dead is purely coincidental.
The letters are also not to be interpreted as an explicit or implied provision of legal advice.
Rosendorff Lawyers do not advocate violence in any way whatsoever and also do not advocate calling anyone a “lying rodent.”
Dear David,
I have recently provided $5,000 worth of advertising services to a company and have been chasing them for money for the last 6 months with no success. They avoid my telephone calls, faxes and emails and keep giving me the run around and handball me over to their accounts department which never gets back to me.
I’ve heard that going through the Courts is time consuming and costly and I really can not afford to be distracted from my business at the moment. I have even engaged several debt collection agencies to harass the company but still no luck.
Is there anything I can do short of breaking both the legs of the company’s managing director with a baseball bat – I’m concerned that me having a criminal conviction will impact on my business reputation.
Yours frustratingly,
Tony Mokbel
Reply:
Dear Tony,
How’s the weather in Greece?
Yes, we have just the solution for you!!
The best option in your situation is what is called a Statutory Demand.
If your debtor company owes in excess of $2,000, you can serve a formal legal notice on the company stating that if the company does not pay the debt within 21 days, you will apply to wind it up. If there is no response within the 21 day period and you apply to the Court for the winding up, the Court will almost always grant the application.
Even if the debtor company re-appears after the 21 day period expires and seeks to have the statutory demand set aside, it will be extremely difficult and costly for it to do so as there will now effectively be a reverse burden of proof – meaning that the Company will need to spend considerable time and money convincing the Court that it is not in fact insolvent.
The advantage of this option is that you eliminate 2 or 3 steps that would otherwise be required in the process if you were initiating proceedings through a traditional Statement of Claim in the Courts so there are less cost and time difficulties to be confronted with.
The other advantage of this option is that you may be able to serve the Statutory Demand on the related companies of the debtor company and end up threatening the liquidation of an entire corporate group.
So with a statutory demand, the incentive for the company to pay up is significantly greater.
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