Statutory demand: using your 15 working days well

A statutory demand is not an ordinary letter from a creditor. It’s a formal step under the Companies Act that starts a clock — and if the clock runs out, the creditor can use it as the basis for asking a court to liquidate your company. The deadline is fixed, but it’s also long enough to fix most problems if you act straight away. The worst thing you can do is put it in a drawer.

What does the law actually say?

Section 289 of the Companies Act 1993 sets out what a statutory demand must do. In summary, it must be in writing, served on the company, relate to a debt that is due and not less than the prescribed amount, and require the company to:

• pay the debt, or
• agree a compromise to the creditor’s reasonable satisfaction, or
• give a charge over its property to secure payment to the creditor’s reasonable satisfaction,

within 15 working days of the date of service, or a longer period if the court orders. That’s roughly three calendar weeks — less around public holidays.

What should I do in the first 24 hours?

1. Note the date of service. The clock starts there.
2. Check the debt. Is it correct? Is any of it disputed?
3. Get legal advice. Especially if you dispute the debt — there are steps to challenge a demand, and timing is critical.
4. Work out what you can pay. Cash available, money due in, assets that could be used.
5. Start a funding enquiry if needed. Don’t wait until day 12.

How can funding help?

Option	How it helps
Fast unsecured loan	Pays smaller demands in full, same-day funding possible
Property-secured loan	Pays larger demands; $20k–$250k same day possible, up to $5m in 24–48 hrs possible
Caveat-style loan	Very fast short-term funding where there’s property and a clear exit
Second mortgage	Uses equity without touching the bank loan

Funds are usually paid directly to the creditor or through the lawyers. With 15 working days, a well-prepared file can comfortably settle in time. Start your enquiry now and note the date of service.

What if several creditors are pressing at once?

A statutory demand is sometimes the first of several. Inland Revenue, suppliers and landlords may all be owed. A single loan that clears the most urgent debts can stabilise things — but only if the business can carry the repayments. Be honest with the specialist about every debt so the plan actually works.

What documents will help?

• The statutory demand and proof of service date.
• Six months of business bank statements.
• ID for directors and guarantors.
• Companies Register details — make sure your annual return is current; the Companies Office warns the Registrar may remove companies that don’t file.
• Property details if offering security.

What should I avoid?

• Ignoring the demand or hoping the creditor won’t follow through.
• Paying part without agreeing it’s a compromise — get it in writing.
• Taking on a loan with no realistic way to repay it.

Should I talk to the creditor while funding is arranged?

Usually, yes — through your lawyer if you have one. A creditor who knows that funding is being arranged and has a realistic date is less likely to take the next step the moment the deadline passes. Keep any agreement in writing, and don’t rely on informal assurances to stop the clock. If the debt is genuinely disputed, your lawyer will advise whether to raise that with the creditor directly or through the formal process for challenging a demand.

What counts as a working day for the deadline?

The 15 working days run from the date the demand is served, not the date you open it. Weekends and public holidays don’t count as working days, and the Christmas and New Year period can affect the calculation, so ask your lawyer to confirm the exact last day in writing. Don’t rely on your own count if the deadline is close.

Plan your funding to land several working days before that date, not on it. That leaves room for the creditor’s lawyer to confirm receipt and for anything unexpected, such as a valuation that takes an extra day. A fast unsecured loan can often be arranged within a day or two; a property-secured loan usually needs a little longer for title checks and lawyers. Either way, starting in the first few days of the 15 gives you a comfortable margin.

Could a charge over property satisfy the demand instead?

Section 289 allows a company to give a charge over its property to secure payment, to the creditor’s reasonable satisfaction. In practice, many creditors simply want paying, and a loan that pays them in full is the cleanest outcome. Your lawyer can advise which route suits your situation.

Illustrative example: a supplier demand

Illustrative only. An Auckland fit-out company is served with a statutory demand for $96,000 by a former materials supplier. The debt isn’t disputed. On day two the director enquires, sending statements and ID; the company owns its small industrial unit. A second-mortgage loan settles on day five, paid via the lawyers to the creditor. The demand is satisfied ten working days early.

Served with a demand? Use the time you have.

Fifteen working days is enough if you start now. Send a short enquiry with the date of service — it takes about a minute and there’s no credit check when you first enquire. Your details stay with our team rather than being shopped to a group of lenders, and a real person calls you promptly. Please give us the exact amount and date so we can plan inside your deadline.

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