Dealing with statutory demands during the Christmas and New Year period

 

 

After a long and busy year, it can be easy for company directors to overlook key obligations and timeframes over the Christmas and New Year period. However, it is fundamental that company officers remain alert to any formal notices or demands received over this period so appropriate and timely action is taken to protect the company’s interests.

Under section 289 of the Companies Act 1993, statutory demands function as a formal demand for payment, issued on a company when it is unable to pay its debts as they fall due.

Where a company does not pay the debt sought in the statutory demand, or make other arrangements acceptable to the creditor, within 15 working days of the statutory demand being served on the company, the creditor can apply to the Court to have the company wound up. As such, it is essential your company acts promptly and seeks legal advice if issued with a statutory demand, especially over the Christmas closedown period. 

 

Here’s what your company should know:

Firstly, ensure you record the date on which the company is served with the statutory demand. From this date, the company has 10 working days to make an application to the High Court to set aside the statutory demand and serve that application on the creditor.

Often, this period is used to seek a resolution of the matter if there is no dispute regarding the debt being due. Likewise, if the debt is genuinely disputed, the statutory demand process is not appropriate, and you should seek its withdrawal. If the creditor declines to withdraw the statutory demand, you must make the application to set aside within the above period.

Under the Companies Act 1993, there are no working days between 25 December and 2 January. However, the timeframes for either setting aside a statutory demand or paying it expire as usual. For example, if your company is served with a statutory demand on 14 December 2022, the 10-working day period to make any application to set aside the demand expires on 6 January 2023 (before most lawyers will have returned to work).

The significance of promptly seeking legal advice is heightened over the Christmas closedown period because the timeframes for responding to a statutory demand are short and strictly enforced. If your company is served with a statutory demand, your lawyer can advise you on the best course of action and help you to comply with the legislative timeframes for responding to the statutory demand. This is crucial, as failing to either respond to a statutory demand or apply to set it aside within the prescribed timeframes can have profound consequences for your company.

Ford Sumner Lawyers close for the Christmas/New Year holidays on 22nd December at 3.00pm and reopen 8.30am on Monday 9th January 2023. If you require legal advice during this period, you can contact:

 

·        Sarah Churstain at sarah@fsl.nz or 021 242 5625;

·        Jaesen Sumner at jaesen@fsl.nz or 021 523 736; or

·        Jordan Todd at jordan@fsl.nz or 021 981 097.