Clough & Willis Solicitors, Commercial and private legal services UK

Statutory Demands – Someone owes me money!

What is a Statutory Demand?
A Statutory Demand is a formal document by which a creditor can demand payment from a debtor. The debtor has a limited period in which to pay after which the creditor can petition to bankrupt (an individual) or wind up (a company) debtor.

The non payment of the statutory demand will be taken as evidence by the Court that the debtor is insolvent and unable to pay its debts as and when they fall due - which is the definition of insolvency.

Can I use one to chase my debts?
Yes, so long as the debt is not disputed on real grounds.

If there is a dispute then the debtor can apply to the Court to prevent you from issuing a Petition for bankruptcy, or winding up.

For individual debtors this is done using the "set aside” procedure where the debtor asks the Court to set aside the demand. If successful the debtor will ask the Court to order you to pay the debtor's legal cost.

For company debtors the company can apply to the Court for an injunction to prevent a Petition being issued or to prevent the advertisement of a Petition which has been issued. Again, if successful the debtor will ask the Court to order you to pay the debtor's legal cost. These can easily be very large indeed - so it is important that before you issue a Statutory demand you ensure that the debt is not disputed on legitimate grounds.

Can I just issue a Petition?
This is quite often done in certain robust areas of trade such as the building trade. It can be a high risk option: a Petition in those circumstances would be based on evidence of non-payment of an invoice. The Court might take the view that this was not evidence of insolvency and might therefore refuse to make the Order you want - and it could order you to pay the debtor's costs. On the other hand the debtor may be too scared of the consequences of a Petition being advertised and may pay up. Issuing a petition against an individual who has not paid a debt (without any other basis than an unpaid invoice) is very risky indeed.

Help
Clough & Willis act for creditors who serve statutory demands. For more information contact Tim Gray who will be pleased to assist: timothy.gray@clough-willis.co.uk

Phone us on 0800 083 0815

E-mail us at info@clough-willis.co.uk

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