Garnishee Order vs Statutory Demand: A Creditor's Guide

When enforcing an unpaid judgment debt against a company in Malaysia, a garnishee order targets money that already belongs to them, while a statutory demand notifies them that non-payment could lead to compulsory liquidation.

For creditors unsure which is a better fit for their situation, our guide aims to provide you with the clarity needed to choose (spoiler: it's probably a garnishee order)

Otherwise, let’s begin.

What does a garnishee order do?

A garnishee order allows a judgment creditor to recover money owed to the judgment debtor by a third party known as a garnishee - the most common being money held in the debtor company's bank account.

If the proceedings are successful, the court may order the garnishee to pay the creditor directly - and if it is a bank, they generally don't raise any objections unless they have a competing interest in the funds.

As far as execution proceedings go, this is as quick and easy as it gets!

What does a statutory demand do?

When a company owes a debt of at least RM50,000, a statutory demand can be served at their registered office to inform them a creditor's winding-up petition may be filed if they don't pay the debt within 21 days.

However, unsecured creditors rarely benefit from following through - our guide to compulsory winding ups goes into detail, but briefly, a company that allows itself to be liquidated likely has a long list of creditors and there is a good chance you see very little of your debt repaid.

Instead, the statutory demand's most common purpose is to pressure operational companies with healthy cashflow that are strongly incentivised to avoid liquidation.

Compared to a garnishee order, a statutory demand carries more uncertainty of actually seeing the debt recovered.

When is each enforcement method most effective?

We've supported creditors through our fair share of garnishee orders and statutory demands, and here is our general recommendation.

Use Garnishee Order if...	Use Statutory Demand if...
• The judgment debtor has money in one or more bank accounts • You can identify a bank or other third party holding money for the judgment debtor • The third party is financially capable of complying with the court order • Your goal is to recover cash directly rather than rely on the debtor's voluntary payment	• The judgment debtor is a company that appears to be operational • The company has ignored previous demands or repeatedly delayed payment • You believe the company can pay but needs stronger pressure to settle

But for argument's sake, if both options were equally viable and we had to recommend one, we'd generally advise creditors opt for a garnishee order - why play chicken with a stubborn debtor when you can just go directly to a third party?

Especially since locating a debtor company's bank accounts may not be that hard!

That’s it from us, and we wish you a smooth recovery 🙂

Garnish your debtor’s bank accounts with Rule & Co.

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With a decade in legal debt recovery, Rule & Co. has supported creditors through countless garnishee proceedings against debtor bank accounts. We guide you through the process from start to finish, helping you understand your options, navigate the court process, and take necessary steps towards recovering what you are owed.