On 29 May 2021, the Corporations Amendment (Statutory Minimum) Regulations 2021 (“Regulations”) commenced to change the statutory minimum of statutory demands. Pursuant to section 459E of the Corporations Act 2001 (“Act”), a creditor may issue a statutory demand (a formal written request) to require a debtor company to pay a debt. Until recently, the debt had to be at least $2,000.00. This is known as the “statutory minimum”. Where a company fails to satisfy the demand (within 21 days of service), the failure to pay becomes proof of the debtor company’s inability to pay its debs and is presumed insolvent. The creditor may rely on that presumption to apply to a Court for the company to be wound up. Effective from 1 July 2021, the Regulations will increase the statutory minimum from $2,000.00 to $4,000.00. In the Explanatory Statement to the Regulations, the Assistant Treasurer, the Honourable Michael Sukkar MP, confirmed that the “statutory minimum for companies eligible for temporary restructuring relief under section 458E of the Act is unchanged”. Any creditors seeking repayment of a debt from a debtor company of at least $2,000.00, but less than $4,000.00, are encouraged to seek urgent legal advice before 1 July 2021.
The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only.