Statutory demand or liquidation application from IRD: your next 15 working days

A statutory demand or a liquidation application from IRD is the most stressful mail a company can receive. It’s formal, it has deadlines, and it often arrives with phone calls from people offering help. This guide gives you a calm, practical plan for the days that follow. It isn’t legal advice, and the first item on the plan is to get some.

What exactly have you received?

There are two different documents, and they start different clocks.

	Statutory demand	Liquidation application
What it is	A formal demand under section 289 of the Companies Act	A High Court proceeding to put the company into liquidation
Usually follows	Unpaid debt and ignored contact	An unpaid statutory demand
Key time limits	Generally 15 working days to comply; set-aside application generally within 10	Shareholders have 10 working days after service to appoint a liquidator without the creditor’s consent; then a hearing date
If ignored	Presumption of insolvency	A liquidation order
Can you still pay?	Yes	Yes, until an order is made

Law and insolvency firms consistently describe the statutory demand timeframes this way (McDonald Vague, secondary). The 10 working day shareholder window has applied since September 2020 (Chapman Tripp, secondary).

These steps are now routine for IRD. In the nine months to 31 March 2026, it issued 1,525 statutory demands, up 19%, and had 605 companies liquidated (IRD).

How do working days work?

“Working day” has a legal meaning that excludes weekends, national public holidays and a period over Christmas and New Year. The date of service also matters, and depends on how the document was delivered. Our statutory demand deadline counter estimates the 10 and 15 working day marks from a date you enter, but treat it as a planning aid. Your lawyer confirms the actual dates.

Day 0 to day 1: secure the facts

• Record the service. When did it arrive, how, and who received it? Keep the envelope or email.
• Call a lawyer the same day. Ask them to confirm the deadlines and whether there’s any basis to dispute the debt.
• Tell every director and your accountant. Directors share responsibility, and decisions in the next fortnight will involve all of you.
• Don’t sign anything with anyone yet.

Days 1 to 3: get the numbers and test viability

The balance. Download your myIR statement of account, split by tax type and period. Check it matches the demand or application. Ask your lawyer what extra costs (such as court costs) would need to be paid to bring a liquidation application to an end.

The documents. Gather:

• the last three to six months of business bank statements;
• latest financial statements or management accounts;
• a list of other creditors, and any personal guarantees directors have given;
• the shareholder current account balance; and
• details of any property that could be used as security, including who owns it and what’s owed on it.

Viability. Ask your accountant one question: setting the old debt aside, does the business earn enough to pay its costs and new tax as it falls due? That answer shapes everything else.

Need a funding answer inside the deadline? Start an urgent enquiry and tell us the service date. There’s no credit check to enquire.

Days 2 to 5: get a funding answer

If the business is viable, find out quickly whether IRD can be paid in full. That’s the cleanest outcome for both documents:

• Property-secured loans from $20,000 to $5,000,000, using first mortgages, second mortgages or caveat-style security over residential or commercial property. Funding is possible in as little as 24 hours once documents are signed.
• Cash-flow options for trading businesses, typically $5,000 to $500,000, sized on turnover and bank statements.

Starting early matters. Even a fast loan needs a valuation or title check, signed documents and often independent legal advice for anyone giving a guarantee. On day two you have room; on day thirteen you may not.

Days 3 to 10: choose your route

You have four realistic options. Your lawyer will advise on the legal side; here’s the practical view.

1. Pay in full. Ends a statutory demand. For a liquidation application, payment plus any costs usually allows your lawyer to ask the court to dismiss it. If the business is viable, this is the natural route.

2. Settle with IRD. Possible, but IRD has already escalated. Any agreement must be clear and in writing before the deadline passes. A phone conversation doesn’t stop the clock.

3. Apply to set aside the demand. Only where there are genuine grounds, such as a real dispute about the debt. The application has a short deadline, generally 10 working days, and needs a lawyer.

4. Appoint a liquidator. Right only if the business can’t continue. If IRD has already applied, shareholders have 10 working days from service to appoint their own licensed liquidator. Use those days to check every other option first.

Insolvency firms commonly list the same choices once an application is served: pay in full, part-pay or negotiate, oppose, or appoint (Liquidation Management, secondary).

What should you ask before appointing anyone?

If you’re considering appointing a liquidator, ask in writing:

1. Are you a licensed insolvency practitioner, and what’s your name on the register?
2. Who will you work for once appointed? (A liquidator’s duties run to creditors.)
3. How are your fees calculated, who pays them, and what’s your written estimate?
4. Have you looked at whether IRD could be paid or refinanced?
5. What happens to my personal guarantees and current account?
6. Will my conduct as a director be investigated?

A liquidator must be a licensed insolvency practitioner (Companies Register). Our questions to ask any adviser checklist has the full list.

Days 10 to 15: close it out

• If paying: confirm the exact figure with IRD (and costs, if there’s a court proceeding), settle the loan, and pay IRD directly. Get written confirmation of payment, and give it to your lawyer.
• If settling: get the agreement in writing, signed, before the deadline.
• If setting aside: your lawyer should already have filed within the shorter window.
• If appointing: make sure it’s a considered decision, with legal advice on your personal position.

What should you avoid in these 15 days?

• Moving assets out of the company, or starting a new company to take over the business. That can breach director duties and the phoenix rules.
• Paying some creditors ahead of others, especially related parties, without legal advice.
• Going silent with IRD.
• Signing on the first meeting with anyone, because of pressure.

Our warning signs checklist lists other red flags.

An illustrative example

Illustrative only. Not a real client and not an offer.

A Christchurch scaffolding company was served an IRD statutory demand for about $265,000 on a Tuesday. By Wednesday, its lawyer had confirmed the deadlines and found no grounds to dispute the debt. On Thursday, the accountant confirmed the business was profitable before a large bad debt. On Friday, the directors applied for a property-secured loan over a commercial yard owned by a related trust, with the trustees taking independent legal advice. The loan settled on day nine, IRD was paid directly, and the lawyer received written confirmation on day ten. The directors also received calls offering a “fast, low-cost liquidation”; having checked the alternatives first, they didn’t need one.

What happens after it’s resolved?

Paying the debt ends the immediate crisis, but the habits that led to it need attention:

• set up a separate tax account and move GST and PAYE into it weekly;
• check myIR monthly and make sure a director sees every notice;
• plan the loan’s exit, whether refinance, sale or trading; and
• keep every return filed on time, which matters for any future refinance.

How should you deal with IRD during the 15 days?

Keep talking, in writing where possible. Once a demand or application has been issued, IRD’s solicitors or its debt team may be handling the file. Let them know you’ve received the document, that you’re taking advice, and what you’re working toward, such as “we expect to pay in full by a specific date and will confirm once funding settles”. Don’t promise dates you can’t meet. If you’re seeking funding, it’s reasonable to say so. Ask IRD to confirm the exact amount needed to settle, including any costs, so there’s no shortfall on the day.

What if the business isn’t viable?

Then the honest answer may be a formal process, and that’s not a failure on your part. If your accountant’s view is that the business can’t cover its costs and new tax even without the old debt, borrowing to pay IRD only adds a loan to a business that can’t carry it. In that case, talk to a licensed insolvency practitioner, ask the questions above, and take legal advice about your guarantees, your current account and any PAYE history before you sign. Our before you liquidate checklist walks through what to check. We’ll also tell you if we think funding isn’t the right answer; we’d rather do that than lend into a business that can’t recover.

Act inside the window

If your company has received a statutory demand or a liquidation application from IRD, contact us today. There’s no credit check to enquire, your enquiry isn’t distributed to other lenders, and a real person will call you, usually the same business day. Give us the service date, the amount and details of any property as accurately as you can, so we can tell you quickly whether paying IRD in full inside the deadline is achievable.