Will the Statutory Demand threshold be increased?

If you are owed money by a company, one way you can recover your debt is to issue the company with a statutory demand. If you issue a statutory demand and the company doesn’t pay you, you can (through lawyers) go to Court and get an Order that the company be placed in liquidation.

Currently to issue a statutory demand, you need to be owed an undisputed debt of $2,000 or more.

But, the threshold was previously raised in response to the economic impact of Covid-19 last year to $20,000, until 31 December 2020. However, it went back to being $2,000 in January 2021. 

The Federal Government is now considering whether to increase the threshold amount for issuing a statutory demand to $10,000. This is because it is also believed that a $2,000 threshold does not make sense commercially, as the costs of issuing a statutory demand and then winding up a company can be three or four times this amount. Also, if you get a statutory demand and you want to dispute it, it can cost $10,000 or more, meaning its probably not worth disputing a demand for a $2,000 debt.

However, an alternative view is that if the amount is increased to $10,000 it is going to be difficult and costly for creditors owed less than this amount to do anything to collect their debts. This means that companies with financial problems could perhaps just avoid paying their smaller creditors. And there won’t be much those creditors can do.

Advice regarding options available

If you wish to discuss this article, or your circumstances, please don’t hesitate to contact Pearce & Heers Brisbane or Gold Coast office and our experienced staff will be able to assist you.


Posted on 20-02-21 in Uncategorized.