Minimum Amount for Statutory Demand

Minimum Amount for Statutory Demand

Co-written by Kane Fieldsend

On 1 July, changes were implemented to increase the statutory minimum amount for a creditor’s statutory demand from $2,000 to $4,000. This is implemented with amendments to section 5.4.01AAA(1)(b) of the Corporations Regulations 2001. The 21-day period in which the debtor is able to respond to the creditor’s demand remains the same under these amendments.

These changes are intended to account for inflation and for the expiration of the limitations on statutory demands introduced in response to the effects of COVID-19 on the solvency of businesses and individuals. These provisions increased the time for a debtor to be able to provide a response to a statutory demand from 21 days to 6 months and increased the amount required from $2,000 to $20,000. This expired on 1 January this year, which likely saw an increase in debt recovery actions by creditors.

These changes could limit the potential avenues for creditors with debts under $4,000 to recover money owed to them. Worse still, if a creditor makes an application for a debt under $4,000 the court may set aside the claim and make an order for costs, potentially doubling the value the creditor is out of pocket.

If you would like to discuss the debt recovery processes for you and your business, please do not hesitate to contact us.


ABOUT AMANDA OLIC:

Amanda Olic

Amanda is our Head of Commercial and has experience in providing legal advice on a broad range of commercial law matters. Amanda has provided advice to small to medium companies and international companies concerning contractual advice, employment policies and agreements, disputes and litigation.


For further information please don’t hesitate to contact:

Amanda Olic
Senior Associate
amanda@couttslegal.com.au
1300 268 887

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