Plain language law

New Zealand law explained for everyone

Companies Act 1993

Liquidations - Company unable to pay its debts

289: Statutory demand

You could also call this:

“A formal written request for a company to pay its debts”

A statutory demand is a way for someone you owe money to (a creditor) to ask your company to pay what it owes. The demand must be about a debt that is due now and is at least as much as the amount set by law. It has to be written down and given to your company.

When you get a statutory demand, it will tell you to do one of these things within 15 working days (or longer if a court says so):

  1. Pay the debt
  2. Make a deal with the creditor to pay the debt in a way that works for both of you
  3. Give the creditor something valuable that belongs to your company as a promise that you’ll pay later

The creditor needs to be happy with whatever option you choose. If you don’t do any of these things, the creditor might think your company can’t pay its debts and could try to close it down.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321970.

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Part 16 Liquidations
Company unable to pay its debts

289Statutory demand

  1. A statutory demand is a demand by a creditor in respect of a debt owing by a company made in accordance with this section.

  2. A statutory demand must—

  3. be in respect of a debt that is due and is not less than the prescribed amount; and
    1. be in writing; and
      1. be served on the company; and
        1. require the company to pay the debt, or enter into a compromise under Part 14, or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service, or such longer period as the court may order.