What a statutory demand is
Section 289 of the Companies Act 1993 lets a creditor serve a demand on a company for a debt that is due. The demand must be in writing, be served on the company, and require it to pay the debt, or reach a compromise or give security to the creditor's reasonable satisfaction, within 15 working days of service. The debt must be at least $1,000, the amount prescribed by regulations.
Statutory demands apply to companies. They are not available against an individual, a partnership or a trust as such.
What happens if the company does not comply
If the company fails to comply, it is presumed to be unable to pay its debts, provided an application to put it into liquidation is made within 30 working days after the deadline passes. That presumption is the foundation of an application to the High Court to appoint a liquidator.
The company can apply to the court to set the demand aside. The application has to be made, and served on the creditor, within 10 working days of the demand being served. The usual grounds are a substantial dispute about whether the debt is owing, or a genuine counterclaim, set-off or cross-demand, though the court can also set a demand aside on other grounds. The 10 working days cannot be extended.
When a statutory demand is the right tool
- The debtor is a company and the debt is due and genuinely undisputed.
- The company is trading and able to pay, but is choosing not to.
- You hold a judgment against the company that has not been paid.
- An amount has become payable under the Construction Contracts Act 2002 because no payment schedule was given.
When it is the wrong tool
A statutory demand is not a way to resolve a dispute. Where the debtor has a genuine argument about the work, the amount or a set-off, the demand will likely be set aside and the creditor may be ordered to pay costs. We check for a dispute before a demand goes out, not after.
Liquidation is a collective process: the debt is claimed alongside every other creditor, and secured and preferential creditors are paid first. Before you spend money on it, we give you our view of whether it is likely to return anything.
How we handle it
We check the debt and the debtor, prepare and serve the demand, deal with any response, and advise on whether liquidation is worth applying for. If it is, we arrange the application.
For the step by step, see our guide on how to issue a statutory demand in New Zealand.
General information, not legal advice. This page describes New Zealand law and practice as at October 2026; the right step for a particular debt depends on its facts. Where a matter needs legal advice, we will say so.