STATUTORY DEMAND- DEBTOR COMPANY HAS 10 WORKING DAYS TO HAVE DEMAND SET ASIDE

STATUTORY DEMAND- DEBTOR COMPANY HAS 10 WORKING DAYS TO HAVE DEMAND SET ASIDE

Written by Shane

Created: 17 April 2013

A debtor company faced with a Statutory Demand must apply to the Court within 10 working days if it wishes to have the Statutory Demand set aside. A debtor company can only challenge a Statutory Demand on the grounds that the debt owed is disputed, is not owed or the Statutory Demand was procedually defective.

The High Court will hear the creditor’s application to have the Statutory Demand set aside. Interestingly, these application hearings  usually get heard a lot quicker than the processing of a liquidation application.

If the Court concludes that the debt is not disputed, the Court has the option to make a ruling right there and then to place the debtor company into liquidation. The High Court may decide to leave the matter in abeyance for a short period of time to see if the debtor company can in fact pay its debts. If the High Court does not do this, and the creditor asks, the High Court can place the debtor company into liquidation immediately.

This is possibly a parlous situation for debtor companies and one that may catch debtor companies unaware.  

This is not legal advice. Do not act upon anything contained in this article without first seeking and consulting with a lawyer.

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