I was cleaning up my bedroom and stumbled across some of my old law school files and found myself engrossed in the statutory powers, which protect corporations against statutory demands served against them by creditors to recover outstanding debts. I figured that a very tiny percentage of fellow Googlers might actually find the following extract interesting:-
What is a statutory demand and what is its significance?
- It represents the creditors commencement of a winding up order against a debtor.
- The statutory demand must require the company to pay the amount of debt within 21 days after the demand is served on the company (see: s459E(2)c). The demand must also provide an attached affidavit.
- If the company fails to comply with the demand, then the creditor may apply to the Court to wind that company up in insolvency (see: s459Q).
How can a debtor challenge a statutory demand?
- The company may apply to set aside a statutory demand within 21 days of the demand being served on them. The grounds to set aside are as follows:
1.There must be a genuine dispute between the parties about the existence or the amount of the debt,
to which the demand relates (see: s459H(1)a).
2. That the company has a claim offsetting that outstanding amount (see: 459H(1)b). An offsetting
claim means a "genuine counter claim or cross demand against the creditor" (even if it does not
arise out of the same transaction or circumstances as a debt to which the demand relates).
How to set aside a demand on other grounds?
- If there is a defect in the demand.
- Substantial injustice will be caused unless the demand is set aside
- There is some other reason why the demand should be set aside.
Order subject to the conditions
- Respondent may also ask the Court to make an Order subject to the conditions (see: 459M).
Costs
- Where the respondent wins and the demand is set aside the Court may order that person making the demand to pay the Companies costs in relation to the application.
No comments:
Post a Comment