Federal Company Law, State Courts
Company law is federal and uniform across the country, which is why the statutory demand works identically wherever the debtor is incorporated. Civil claims, by contrast, are heard in state and territory courts - Supreme, District or County, and Magistrates - with different rules, scales and limitation periods in each. The debtor's state therefore determines the litigation path even though the insolvency route does not.
Statutory Demand Under Section 459E
A creditor owed a due and payable debt above the statutory minimum can serve a demand under section 459E of the Corporations Act. The company has twenty-one days to pay, secure the debt or apply to set the demand aside.
Failure to do any of those creates a presumption of insolvency - the creditor no longer has to prove the company cannot pay; the company has to prove it can. That reversal is what gives the instrument its force, and it is why a well-founded statutory demand against a trading company usually produces payment rather than litigation.
The twenty-one day period is strict and the requirements for a valid demand are technical. A defective demand can be set aside with costs, and a demand used against a genuinely disputed debt will be.
Retention of Title and the PPSR
This catches foreign suppliers more often than any other feature of Australian law. If you supply goods on retention of title terms, the reservation of ownership is a security interest under the Personal Property Securities regime - and it must be registered on the PPSR to be effective against an administrator or liquidator.
An unregistered retention of title clause, however carefully drafted, generally does not survive the customer's insolvency. The goods vest in the company and the supplier ranks as an ordinary unsecured creditor. Where you trade regularly into Australia, registration is a routine administrative step that changes your position entirely - and where you have not registered, it is worth knowing before deciding how hard to push a struggling debtor.
How Long Does an Australian Claim Take?
| Stage | Typical Duration | Cost |
|---|---|---|
| Letter of demand Formal demand, negotiation | 2–4 weeks | Low |
| Statutory demand 21 days to comply or set aside | 3–6 weeks | Low |
| Court claim Undefended, to judgment | 2–6 months | Medium |
| Defended proceedings State court, to hearing | 1–2 years | High |
| Enforcement Garnishee, writ, examination | 2–5 months | Medium |
Six Years, With State Variation
Most states and territories apply a six-year limitation period to contract claims, running from when the cause of action accrued. Not all do, and the periods are set by state legislation rather than federally, so the debtor's location matters. A written acknowledgement or part payment restarts the clock in the usual way.
How Does SXB Global Handle an Australian Case?
Two questions open every Australian file: is the debt genuinely undisputed, which decides whether a statutory demand is appropriate, and did you supply on retention of title with a PPSR registration, which decides where you would rank if the company fails. The second question is one most creditors have never been asked. Where legal proceedings become appropriate, SXB Global coordinates the instruction of appropriately authorised local counsel. Legal services are provided by the relevant independent legal professionals.