Problem / challenge faced
- The client was engaged by a builder to carry out earthworks and related work at a building site.
- The client performed the works and the builder only paid some invoices and failed to pay other invoices (where there was no genuine dispute that the debts were due and owing to the client).
- The client was out of pocket a significant sum of money by its unpaid invoices and engaged us to recover the money owing to it.
Solution provided
We immediately issued a statutory demand to the builder under the Corporations Act 2001 for unpaid invoices giving the builder 21 days to pay.
The effect of the demand was that if the builder failed to pay the amounts owing within 21 days the client would be entitled to apply to the Court to wind up the builder company in insolvency and appoint a liquidator.
The builder failed to pay within the statutory 21 day period. The legal effect of their failure to pay was that the builder was presumed insolvent. This put pressure on the builder to pay the outstanding invoices to the client, failing which the builder faced being wound up and put into liquidation.
Results achieved
The builder settled the debt with the client and the parties entered into a deed of settlement. The case was resolved within 3 months.
The statutory demand process applies where a company owes you a debt greater than $4,000 and there is no genuine dispute about the debt. Please contact us to discuss whether your case is suitable for using a statutory demand.
