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Setting aside statutory demands

Setting aside statutory demands

If ignored, a statutory demand can be a death sentence for your company.

If you don’t pay the debt or apply to a court within 21 days, your company is presumed insolvent and may be liquidated. Act now! 

A creditor’s statutory demand for payment of a debt (Form 509H) is the corporate equivalent of a bankruptcy notice. It requires a company to pay a debt within 21 days or apply to a court to set the demand aside. A company that does neither will be presumed insolvent and the creditor will then be able to issue winding up proceedings.

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How we can help you

At an assessment we will give you advice on your prospects of having the demand set aside. If the matter cannot be resolved by negotiation, we offer fixed price court representation.

Assessment

$440 inc GST

If you dispute the debt or believe you have an offsetting claim against the creditor, we will review the situation and advise you of your chances of having the demand set aside.

We will provide you with a fixed price quote for a Negotiated settlement or Court hearing after we have considered the matter at an Assessment.

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Negotiated settlement

We will:

  • prepare an affidavit explaining why the demand should be set aside; and
  • before incurring court fees, send a copy to your creditor and invite them to withdraw the demand.

If your affidavit raises a genuine dispute, a sensible creditor will withdraw the demand to avoid the risk of paying your legal costs.

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Court hearing

If the matter is not resolved by negotiation, we will:

  • file your application and supporting affidavit at the Supreme Court of Western Australia;
  • attend one directions hearing;
  • prepare written legal submissions; and
  • prepare for and represent your company at the court’s hearing of your application.

If you succeed, the court will usually order the creditor to pay your legal fees assessed by reference to the court’s scale.

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FAQs

A creditor’s statutory demand for payment of a debt (Form 509H) is the corporate equivalent of a bankruptcy notice. It requires a company to pay a debt within 21 days or apply to a court to set the demand aside. A company that does neither will be presumed insolvent and the creditor will then be able to issue winding up proceedings.
The liquidator is required to act in the interests of the creditors. He/she takes control of the company and its assets and manages its affairs without reference to the directors. He/she will sell the assets and may pursue any of the company’s claims against others – including its directors! The liquidator’s fees are payable from the company’s assets. The liquidator must lodge a report with ASIC as to the company’s affairs. Ultimately, the company will be deregistered.
No. If you successfully set aside the demand, it is open for the creditor to commence court proceedings against you in the usual way. In an application of this sort, the court is only looking at whether there is a genuine dispute or a genuinely asserted offsetting claim – it does not finally decide who is right.
You will usually be entitled to an order that the creditor pay your costs if you are successful in setting aside the demand. These costs are assessed in accordance with a legislative scale and are usually less than what you pay us.
No, the court rules require a company to be represented by a lawyer. Further, the law in this area is very technical and minor mistakes can be fatal to the application.
Immediately. If you don’t pay the debt within 21 days or apply to the court to set it aside, you cannot later challenge the demand.The sooner you contact us, the more options we will be able to offer you. Whilst we will always do our best to help you, it takes time to prepare a court application. If you delay, we may not be able to assist you.
You may be able to challenge a demand if:
  • you dispute you owe the creditor the money;
  • the creditor owes you money (i.e. an offsetting claim);
  • if the demand is defective and that defect results in a substantial injustice (for example, the demand does not clearly state the amount you must pay); or
  • for some other reason (for example, the demand is an abuse of process).
You must file and serve your application on the creditor within 21 days of receiving the demand. It is not possible to extend this deadline.

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We’ll guide you step by step with practical advice and clear communication, so you always know what to expect. Read what our clients say.
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With hundreds of disputes resolved — big and small — we bring deep experience, legal know-how, and genuine care to every client we support.

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Michael Hodgkins
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Michael is an experienced succession and property lawyer and has served the Western Australian community as a legal practitioner for over 27 years at Curae Law.  Michael has represented clients, both in and out of court, in matters spanning……
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Nigel leads the firm’s litigation and dispute resolution team and has experience in a wide variety of litigation matters including deceased estate litigation, family provision claims, contractual and construction disputes, trust and property matters. Nigel has an instinctive ability……
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What our clients say

Omg, this is like a Christmas gift for me. [Debt having been paid]. Great job Bea and team😊
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December 16, 2025
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December 11, 2025
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