Legal Project Management Plan & Checklist
Purpose of this Guide: Use this plan when your client's company has been served with a statutory demand and needs to respond urgently. The company has only 21 days from service to either pay the demand, reach a settlement with the creditor, or file an application in court to set the demand aside. Failing to act within 21 days creates a presumption of insolvency that can be used to wind up the company. Open this plan the same day the demand is received - time is critical. Verify current guidelines on the official Australia Government Portal. Access services via the Federal Register of Legislation.
Jurisdiction: Federal Court of Australia or Supreme Court of the relevant state (depending on where the company is incorporated or carries on business). The application to set aside must be filed within 21 days of service of the demand - there is no power to extend this time. Forks address the two main responses: applying to set aside the demand on the basis of a genuine dispute or offsetting claim, and transitioning to voluntary administration if the company genuinely cannot pay. Verify current guidelines on the official .
Use this fork when the company has been served with a statutory demand and there is a genuine dispute about whether the debt is owed, or the company has an offsetting claim against the creditor that equals or exceeds the amount of the demand. This fork covers the urgent court application that must be filed within 21 days of service. Verify current guidelines on the official Australia Government Portal. Access services via the Federal Register of Legislation.
Use this fork when the company has received a statutory demand and cannot pay its debts, but the directors believe the company is viable if given time to restructure. Voluntary administration provides a short breathing space from creditor action - typically 25 business days - during which an independent administrator assesses whether the company should execute a deed of company arrangement, be wound up, or be returned to the directors. Verify current guidelines on the official Australia Government Portal. Access services via the Federal Register of Legislation.
The Process at a Glance: Read the demand carefully and note the exact date of service - the 21-day countdown begins immediately. Review whether the underlying debt is genuinely disputed or whether the company has an offsetting claim against the creditor. If there is a genuine dispute or offsetting claim, prepare and file an application to set aside in the appropriate court within 21 days. If the debt is not disputed, assess whether the company can pay and, if not, whether voluntary administration or liquidation is appropriate. Negotiate with the creditor - many demands are resolved by a payment arrangement. If no application is filed and the demand is not complied with after 21 days, the company is deemed insolvent. Verify current guidelines on the official Australia Government Portal. Access services via the Federal Register of Legislation.
Key Legislation and Case Law: Corporations Act 2001 (Cth) s 459G (21-day filing deadline to set aside - cannot be extended: David Grant & Co v Westpac Banking Corporation (1995) 184 CLR 265), s 459H (genuine dispute or offsetting claim as grounds to set aside), s 459J (other grounds: defect causing substantial injustice, or other reason). The 21-day deadline is strictly enforced. A "genuine dispute" requires a real, honest question that is not merely fanciful: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. Verify current guidelines on the official Australia Government Portal.
* Disclaimer: We're nobody's lawyer, because we aren't lawyers. You are, so you know better than to take legal advice from an app. We also aren't accountants or dog trainers - just digital spirit guides taking zero liability for any of this. This site exists to gather the collective knowledge of practitioners like you. Verify everything and submit your feedback on the Corporate Insolvency: Statutory Demand (Debtor) matter plan to improve the playbook. THIS IS NOT LEGAL ADVICE, it's a request for input.
This legal matter plan provides a structured workflow for COMMERCIAL_LAW cases, outlining the standard RESTRUCTURING process. Utilize these tracking templates to manage your legal cases efficiently.
Perform conflict checks, establish the strict 21-day deadline, and gather documents.
Verify all prerequisite documentation has been obtained, cross-reference against the statutory requirements for this matter type, and confirm compliance with practice direction protocols.
Prepare the relevant forms and supporting materials required under the applicable legislation, ensuring all mandatory fields are completed and all attachments are properly certified.
s 459G Corporations Act 2001 (Cth) - the application to set aside must be made within 21 days after the demand is served. The court has NO power to extend this deadline under any circumstances.
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 - the High Court confirmed the 21-day period is an absolute jurisdictional prerequisite. The court cannot extend time even if the applicant has a strong case on the merits.
The 21 days runs from service, not from the date the demand was drafted or dated.
Draft and dispatch formal correspondence addressing the procedural requirements at this stage, including any required notices, requests for information, or proposals for resolution.
Evaluate statutory defences including genuine dispute, offsetting claims, and formal defects.
Coordinate the collection and review of all financial documentation required for disclosure, including statements, valuations, and supporting schedules as mandated by the rules.
Advise the board on legal options and potential personal liability (insolvent trading).
Assess the strategic considerations for interim applications, prepare supporting evidence, and draft the necessary documentation for urgent or time-sensitive relief sought.
s 459E(3) Corporations Act 2001 (Cth) - non-judgment debts must be accompanied by a verifying affidavit. Absence of this affidavit is a defect.
s 459J(1)(a) - the court may set aside a demand if there is a defect in the demand and 'substantial injustice will be caused unless the demand is set aside'. The test for substantial injustice considers whether the defect misled the debtor.
s 459J(1)(b) - the court may also set aside for 'some other reason' - this is a broad residual power.
Porterhouse Holdings Pty Ltd v Deka Australia Pty Ltd [2020] NSWSC 1771 - even technical defects in the demand form can ground a set-aside if they cause confusion about the amount or nature of the debt.
Conduct a thorough review of all filed materials to ensure compliance with court requirements, verify service obligations have been met, and prepare for the next procedural milestone.
s 459H Corporations Act 2001 (Cth) - the court must set aside or vary the demand if satisfied there is:
The 'genuine dispute' threshold is low - merely a 'plausible contention requiring investigation': Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785. The court must not conduct a mini-trial.
The 'substantiated amount' is calculated as: Demand Amount – Disputed Amount – Offsetting Claim. If the substantiated amount is below $4,000, the demand is set aside entirely.
s 95A Corporations Act 2001 (Cth) - defines insolvency as the inability to pay debts as and when they become due and payable (the 'cash flow' or 'commercial' insolvency test).
This is distinct from 'balance sheet insolvency' (liabilities exceeding assets). A company can be balance-sheet insolvent but still commercially solvent if it can meet debts as they fall due.
Verify all prerequisite documentation has been obtained, cross-reference against the statutory requirements for this matter type, and confirm compliance with practice direction protocols.
s 588G Corporations Act 2001 (Cth) - directors who allow a company to incur debts while insolvent (or while there are reasonable grounds to suspect insolvency) face personal liability for those debts. This includes civil penalty orders and compensation orders.
s 588GA - Safe Harbour defence: directors are protected from insolvent trading liability if, after the director starts to suspect insolvency, they begin developing one or more courses of action that are reasonably likely to lead to a better outcome for the company than winding up.
Safe Harbour requires the company to be up-to-date on employee entitlements and tax reporting obligations.
Prepare the relevant forms and supporting materials required under the applicable legislation, ensuring all mandatory fields are completed and all attachments are properly certified.