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When a company owes you and does not pay Tired of Re-sending Invoices?

This article aims to individuals and business owners who may have conducted business with a company but the company refuses to does not pay its outstanding invoices past its due date. The description provided here is merely a guideline and every case turns on its on fact. Is the company financially sound? One of the […]

When a company owes you and does not pay Tired of Re-sending Invoices?

When a company owes you and does not pay Tired of Re-sending Invoices?

By Aylward Game - Jun 8, 2023 Litigation

This article aims to individuals and business owners who may have conducted business with a company but the company refuses to does not pay its outstanding invoices past its due date. The description provided here is merely a guideline and every case turns on its on fact.

Is the company financially sound?

One of the preliminary considerations prior to dealing with any company is to ensure that you do all the necessary due diligence to see whether the company you are about to transact with is financially sound. Of course, history has shown us some examples where the company was initially financially sound but over a period of time it went down, and for some, it went into liquidation. What, and how, you do your due diligence for this purpose is both subjective and objective. There is no simple single solution to safeguard yourselves fully against the threat of a company possibly becoming insolvent. However, if at best, you are able to conduct your due diligence with a satisfactory outcome, this can be a good start.

How can I recover my unpaid invoices?

There is no short answer to this, there are many variables. Before embarking on any recovery efforts, it is important to see whether all your documentation is in order. For example, if you have performed your obligations under a contract for a company (that is completed the work you contracted to do for them) and issued your tax invoice and the company has not paid it within the prescribed period then you may opt to consider issuing a Statutory Demand.

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What is a Statutory Demand?

A Statutory Demand is a creditor’s formal, written request requiring a company to pay a debt within the statutory period which is currently 21 days. Before you embark on this task and instructing your lawyer to prepare a Statutory Demand to be served on the company, you need to ensure that the company (at least at that stage) has some identifiable assets, value of which, is greater than the amount the company owes you. These assets should also be unencumbered, meaning, there are no other creditors to claim them.

How does the Statutory Demand function?

There are some rules governing the Statutory Demand. In short, the debt must be at least $4,000 and it has to be prepared using the prescribed Form. This then need to be served on the company in accordance with s109X of the Corporations Act 2001 (Cth).

How does the Statutory Demand make the company pay me?

It is important to remember that if a company fails to comply with the Statutory Demand within the time prescribed, the company is presumed insolvent under the Corporations Act. Within three month of the date of non-compliance, the creditor who served the demand may rely on the presumption of insolvency as the basis for an application to the Court for orders winding up the company.

Is a Statutory Demand suitable for me?

As straightforward as it may sound, we highly recommend that you seek our advice prior to considering whether making a Statutory Demand may be suitable for you. Again, every case turns on its own fact.

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Take-home message

If a Statutory Demand is in order and, providing all other things being equal, it may be a substitute for a lengthy traditional litigation process by way of Claim and Statement of Claim, for example. Remember, some debtor companies do care about their company, their reputation etc..and these, subject to evidence being satisfactory, may well be pursued using the Statutory Demand method. However, there are other debtor companies that may not be suitable for this purpose at all simply because there are insolvent already and have no assets, for example.

For advice or assistance with all Insolvency law matters contact the Litigation Team at Aylward Game Solicitors today on 1800 217 217

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You may also like to know more information about the related article:

Commercial Litigation

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