A statutory demand is serious, but receiving one is not the same thing as your company already being liquidated. It is a formal step that requires immediate attention. Your first call should be to a New Zealand lawyer experienced in company and insolvency matters—not to a lender. The validity of the demand, the amount, service date and available responses are legal questions with short timeframes.
First steps today
- Keep the complete document. Save every page, covering email or envelope, and record when and how it was served. Do not rely on memory for the date.
- Call a New Zealand insolvency or commercial lawyer today. Ask them to calculate the applicable deadlines and assess whether the debt is due, disputed or subject to a counterclaim. Do not assume an informal reply pauses a legal clock.
- Tell your accountant. Prepare an up-to-date list of all creditors, bank balances, receivables, tax, wages, rent, existing security and cash expected shortly.
- Avoid making new commitments blindly. Directors have duties to act carefully where a company may be unable to pay its debts. Get advice before incurring further obligations or preferring one creditor without understanding the consequences.
- Keep discussions factual and documented. Your lawyer can advise how to respond to the creditor and what form any compromise or settlement should take.
Under the Companies Act 1993 provisions on statutory demands, time limits can apply both to complying with a demand and to asking a court to set it aside. The exact calculation depends on service and the circumstances. This article deliberately does not substitute its own deadline calculation for legal advice.
What are the possible pathways?
Your lawyer may consider whether the demand is valid, whether there is a genuine dispute, whether the company can pay, whether a compromise can be reached and whether any formal insolvency process should be considered. If the debt is acknowledged, a verified funding plan can be part of negotiations—but it should deal with the company’s wider cash position, not merely one creditor.
Business.govt.nz explains insolvency and involuntary closure and encourages early contact with creditors and qualified advisers. The Companies Register guidance for directors also makes clear that directors should not borrow beyond what the company can sensibly repay. These are reasons to build a complete plan, not reasons to panic.
Could a property-backed business loan help?
In some situations, yes. HomeSec considers genuine business-purpose, property-secured loans from $20,000 to $1,000,000. A prior credit event, overdue debt or a difficult trading period does not automatically prevent a conversation. We look at the business purpose, property equity, existing mortgages, legal position and a credible way to repay the facility. We do not guarantee approval or lend solely because there is property.
For an approved case, open-term flexibility and up to six months with no scheduled payments may be available. Interest and fees may still accrue and increase the balance during a payment-free period. Funding in as little as 24 hours may be possible when the case is complete and approval, documents, security and settlement all align. A statutory-demand deadline is not something a lender can guarantee to meet.
If the business is insolvent or the proposed loan would simply delay failure while putting an owner’s property at risk, borrowing may be the wrong response. Compare independent restructuring advice, creditor compromise, equity injection, asset sale and other realistic choices before signing.
What should I bring to a finance conversation?
Bring the amount and purpose of the proposed borrowing, the demand and legal advice received, a complete creditor schedule, near-term cash picture, the property address and ownership, estimated value and current secured balances. A clear, honest explanation helps us determine whether there is a scenario to assess; you do not need to pretend that the demand never happened.
If your adviser says finance is worth exploring, let’s talk through the full picture.