For most corporations in today’s marketplace managing debt is an integral part of business operations. We all know that our creditors must be paid promptly. However, with tight cash flow and other market pressures businesses are not always capable of paying their creditors on time.
Your company may, at some point, be served with a creditor’s Statutory Demand requiring payment of a debt within a period of 21 days. In a busy commercial environment this notice may be overlooked or confused with a mere solicitor’s letter of demand. It is important to be aware that they are not the same.
A Statutory Demand must never be ignored.
A failure to either pay the debt the subject of the Statutory Demand or take action to have the Demand set aside within the prescribed 21 days gives rise to a presumption of corporate insolvency. In short – if you do nothing within 21 days the creditor issuing the demand can take steps to wind up your company.
It is just as important to note that the 21 day period cannot be extended.
Many otherwise healthy companies are wound as a result of small debts simply because the company overlooked, or did not recognise the significance of a Statutory Demand.
If your company is served with a Statutory Demand it is imperative that you seek legal advice immediately.
Contact Tracy Cannell for further information