A statutory demand or wind-up threat doesn’t mean the end of your business — but time and precision matter. Learn how to respond, what courts look for, and where businesses often go wrong.
Few documents cause panic quite like a statutory demand. For many directors, it feels like the moment everything becomes urgent, legal and out of their control. The reality is that a statutory demand is not a winding-up order — but it is a trigger point where the next steps matter enormously.
Once a statutory demand is served, the clock starts ticking immediately. Businesses generally have just 21 days to respond. Miss that deadline and the creditor gains a powerful presumption of insolvency, making it far easier for them to apply to wind the company up. At that point, options narrow quickly.
What many directors don’t realise is that statutory demands can sometimes be challenged. A demand may be set aside if there is a genuine dispute about the debt, an offsetting claim, or a defect that causes real prejudice. But courts take these applications seriously. Simply asserting that cash flow is tight or that payment will be made later is not enough.
This is where affidavit preparation becomes critical — and where many defences fail. Courts expect evidence, not emotion. Affidavits must be precise, factual and directly address the legal grounds relied upon. Poorly drafted affidavits, inconsistent financial information or unsupported claims can undermine a defence before it truly begins. Once filed, mistakes are difficult to fix.
Timing is just as important as substance. Court timetables are strict, and delays can be fatal to an application. Waiting to “see if the creditor blinks” or assuming negotiations will pause the process often leads to winding-up applications being filed while directors are still scrambling for advice.
If a wind-up application is already underway, the focus shifts again. At this stage, businesses may still have options, including negotiated settlements, adjournments or restructuring pathways — but credibility matters. Creditors and courts respond far better to clear plans and realistic proposals than last-minute promises.
At Tax Negotiators, we regularly see businesses that could have avoided escalation if they had acted earlier or taken a more strategic approach. The difference between recovery and liquidation often comes down to understanding the process, respecting the timelines and putting forward evidence that stands up under scrutiny.
A statutory demand should never be ignored — but it also shouldn’t be treated as an automatic end point. With the right advice, many businesses are able to defend their position, buy time or negotiate outcomes that protect value and reduce risk.
If you’ve received a statutory demand, suspect one is coming, or are facing a wind-up threat, early intervention is essential. Calm, informed action creates options. Delay removes them.
