Update on Statutory Demands – changes to minimum threshold and (for some) time to comply
On 1 July 2021, Schedule 1 to the Corporations Amendment (Statutory Minimum) Regulations 2021 (Cth) (Regulations) came into force, increasing the minimum amount which a debtor company must owe a creditor before that creditor can issue a statutory demand to the debtor (Statutory Minimum) and changing, for some debtors, the period in which debtors can comply with a statutory demand (Statutory Period).
Before 1 July 2021, the Statutory Minimum was $2,000, unless the debtor company was eligible for temporary restructuring relief pursuant to section 458E in Part 5.3B of the Corporations Act 2001 (Cth) (Temporary Restructuring Relief), in which case it was $20,000 pursuant to Schedule 2 to the Corporations Amendment (Corporate Insolvency Reforms) Regulations 2020 (Reforms Regulations).
The Statutory Period has for a long time been 21 days. The Reforms Regulations extended that to 6 months for debtor companies eligible for Temporary Restructuring Relief.
From 1 July 2021, the Statutory Minimum increased to $4,000 (from $2,000) unless the debtor company was eligible for Temporary Restructuring Relief, in which case it is $20,000 and 6 months to comply. However, that higher Statutory Minimum and longer Statutory Period for debtor companies eligible for Temporary Restructuring Relief are coming to an end.
In that regard, all debtor companies served with a statutory demand on or after 1 August 2021 will be subject to the $4,000 Statutory Minimum and a 21-day Statutory Period, regardless of whether they were eligible for Temporary Restructuring Relief.