What is a statutory demand?

By Tina Hwang | liquidation | receivership | bankruptcy | statutory demand

What is a statutory demand? A statutory demand is a demand for undisputed debt to be payable within a certain amount of time. There are 5 requirements that are needed:

  • Must be for undisputed debt; 
  • Must be in writing; 
  • Must be properly served; 
  • Must be for over $1,000.00; 
  • The demand must be payable within 15 working days. 

Different to Debt Recovery  

Statutory demand is different from debt recovery. It must not be used as a process to simply recover debt and there must be a basis of questionable insolvency. This process will be held in the liquidation court and not the normal courts, as the basis and process of statutory demands are different. 


There are critical timeframes to be served. Once a statutory demand is served, the recipient has: 

a. 10 working days to file an application in court to set aside the statutory demand; or

b. 15 working days to pay.


You can only serve a statutory demand against an incorporated company. You cannot serve a statutory demand to a trust, partnership, or person.  

"You can only serve a statutory demand against an incorporated company. You cannot serve a statutory demand to a trust, partnership, or person."

Differences between Receivership, Liquidation, Bankruptcy 

A statutory demand threatens liquidation. If the demand is not paid within 15 working days payment, and no action has been taken to challenge the statutory demand, the entity serving the statutory demand can apply for liquidation of the company. This is different from receivership.

Receivership is when a company’s secured creditor appoints a receiver (with court orders) to collect money that the company owes the creditor. It’s primary focus is to repay that particular debt and a receiver may take control of the company’s assets to repay the debt to the secured creditor.

Bankruptcy is when a person (not a company) has more liabilities than assets, and declares bankruptcy and their personal property becomes the property of the Official Assignee.  This process normally lasts 3 years.

Liquidation is a formal process where a liquidator is appointed (could be voluntary or court ordered) to place the company into liquidation. A liquidator will be appointed and assess what is owed and how much of the company has to set off any debt. As a result, liquidation normally terminates or winds up the company’s operation.

If you have any property, construction, or litigation queries, please feel free to contact Tina Hwang or the Property Team on property@qcl.co.nz.

We have taken care to ensure that the information given is accurate, however it is intended for general guidance only and it should not be relied upon in individual cases. Professional advice should always be sought before any decision or action is taken.