3. Apart from validly serving the statutory demand on Mr. T, what other conditions must be satisfied before ABC Bank can file a bankruptcy petition?
- the amount of debt for the petition should be equal to or exceed $10,000;
- the debt is for a “liquidated” sum (i.e. a sum with precise calculation) payable to the petitioning creditor either immediately or at some certain time in future, and is unsecured;
- the debtor appears to be unable to pay or has no reasonable prospect of being able to pay the debts; and
- there is no outstanding application to Court to set aside (make it invalid) the statutory demand.
For proving the inability to pay or no reasonable prospect to pay the debt, the creditor should show that the debtor has failed to comply with or set aside the statutory demand within 3 weeks after the demand was served (if served by a newspaper advertisement, then from the date of posting in the newspaper).
If ABC Bank has fulfilled the above conditions, then it or its lawyer can file the bankruptcy petition with the High Court and serve the sealed copy of the petition on Mr. T.