Increased Statutory Threshold for Creditor’s Statutory Demands
- Published 01.07.2021
On 27 May 2021, the Federal Government passed the Corporations Amendment (Statutory Minimum) Regulations 2021, resulting in key amendments to 5.4.01AAA of the Corporations Regulations 2001 (Cth).
Until 30 June 2021, creditors were able to serve a debtor company with a statutory demand in respect of a debt or debts which exceeded the statutory minimum of $2,000, unless the debtor company was eligible for temporary restructuring relief, in which case, the statutory minimum was $20,000.
From 1 July 2021, the statutory minimum has been increased to $4,000 and applies to all statutory demands served on or after 1 July 2021. The time for a debtor company to comply with the statutory demand under the new regulations remains at 21 days.
Changes to the temporary restructuring relief provisions
The statutory minimum of $20,000 will continue to apply to companies which are eligible for temporary restructuring relief until 31 July 2021. From 1 August 2021, the temporary restructuring relief provisions will cease to apply and the new statutory threshold of $4,000 and the 21 day period for compliance will apply to all companies, including those which were previously eligible for temporary restricting relief.
It is critical that creditors are aware of the legislative amendments which commence in July 2021. Creditors who issue statutory demands for less than the new statutory minimum can expect the court to set aside the statutory demand, and the court may make an order for costs against the creditor.
If you are owed a debt less than the new statutory minimum, you will have to consider alternative enforcement options. To find out more about which enforcement options are suitable to your circumstances, please contact Daniel Turk.
For more information about the amendments to the Corporations Regulations 2001 (Cth), please see Corporations Amendment (Statutory Minimum) Regulations 2021