Can a payment plan resolve a statutory demand?

An instalment has been paid but the demand remains unclear

A manufacturing company receives a statutory demand and offers weekly instalments. The creditor replies that the proposal looks reasonable, and the company sends the first payment. No document explains whether the demand is withdrawn, what happens on default or whether the creditor has accepted the arrangement. The director needs more than evidence that money was sent.

Distinguish the offer from acceptance

Collect the proposal, replies, payment receipts and any conditions. Identify who had authority to agree for the creditor and company. A request for more information or an expression of interest is not a complete agreement.

Ask a lawyer to assess the exchange promptly. The question concerns both the commercial debt arrangement and the formal demand already served.

Make the treatment of the demand explicit

Have the proposed terms address the demand, timing, any withdrawal, enforcement position and consequences of default. Check whether costs and interest are included.

The Federal Court’s guidance describes formal demand compliance and response requirements. A plan must be assessed against that process; do not assume any instalment payment automatically neutralises the notice.

Source: Federal Court — Winding up proceedings based on an unsatisfied statutory demand

Test the payment schedule

Forecast instalments alongside ordinary trading costs and other debts. Identify the receipt supporting each payment and what happens if it is late. Avoid offering the largest first instalment possible if it leaves the next one unfunded.

If the company cannot sustain the proposal, seek advice on wider options now. A plan designed only to get past the current demand may fail before it repairs the underlying position.

Document and monitor what is agreed

Keep an executed or otherwise properly confirmed agreement and evidence that any required procedural steps occurred. Update payment instructions and assign someone to monitor compliance.

Until your lawyer confirms the effect, preserve the original response timetable. If circumstances change later, obtain advice before varying payments informally or assuming the creditor will overlook a missed date.

Confirm both the payment plan and the formal position

Obtain clear acceptance and terms dealing with the demand.

Test instalments against the whole cash forecast.

Verify procedural steps as well as the first payment.

Call CRP today to coordinate legal and financial support for a proposed statutory-demand payment arrangement.