I am hoping you can give me some advice. I have a successful landscaping company that specialises in producing one of a kind creations for our customers. A while ago a company who shall not be named asked whether we would like to feature our unique designs on their development project. Once completed we invoiced the company for the work done but we did not hear anything. We have sent them reminder after reminder but we still have not been paid. I have heard through the grapevine the company is in trouble and now I am starting to think they do not have any money. What can we do?
If you are owed a debt by a company that you suspect is having financial trouble then I suggest you issue a statutory demand against the company. The purpose of issuing a statutory demand is to discover whether the company is solvent. If it turns out that your suspicions are correct and the company does not have any money then you can apply to have the company put into liquidation.
Before you serve the demand you must be certain that the debt is undisputed. It is useful to review the correspondence and make sure that there is nothing that suggests that they are unhappy with your work. If the debt is disputed then there is a risk that the company could apply to set the statutory demand aside. You would then have to defend the application or risk having the demand set aside and being liable for their costs.
If you are confident the invoice is not disputed you can proceed with serving the statutory demand. I would recommend you engage a lawyer for this process so that the requirements set out in 289 of the Companies Act 1993 are complied with and that it is properly served on the company.
After the demand has been served the company has 15 working days to either pay, settle or secure the debt. If the company does not comply with the demand within this period then you can apply to the High Court to place the company into liquidation.
A statutory demand can be a powerful weapon because part of the process is when it expires is to advertise in the local newspaper and in the New Zealand Gazette that liquidation proceedings have been started, including the place, date and time setting for the hearing. If the company wants to avoid the embarrassment of publication and running the risk of other creditors discovering the pending liquidation proceedings then they are likely to try and settle the demand.
If the company still does not comply with the demand then you need to apply to the Court to liquidate the company. There is some expense in advertising and making the application, so you need to be prepared to follow through with this action in the event they don’t pay.
Please let me know if you would like help with taking this matter further. Good luck, Trevo