Commercial Law Services
Statutory Demands – Information for Debtors
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.
I have set out below some information about statutory demands which I hope you may find helpful.
I have received one - what should I do?
If you have received a statutory demand what you can do depends on whether you are an individual or a company
I am an Individual - what should I do?
If you dispute the debt you can apply to the Court to set aside the statutory demand. The application is made to the local County Court (which should be specified on the demand) and has to be supported by evidence.
If the Court is satisfied, on reading the application, that there is a ground for setting aside the demand it will list a hearing and you will have to attend and show the District Judge why the debt is not owed. If the judge agrees the demand will be set aside and you may be able to recover your legal costs .
If you cannot dispute the debt all you can do now is pay - or take advice about other options which may be open to you (such as a voluntary arrangement - an IVA)
I am a Company director and my company has received a demand - what should I do?
There is no "set aside” provision for companies.
If the debt is genuinely disputed then the company can make an application to the Court for an injunction to prevent a Petition being issued. If it has already been issued an injunction can be sought to prevent the Petition being advertised.
Note: is it not enough to send a "defence” to the creditor: a Petition may still be issued and costs incurred.
If the debt cannot be disputed then the company should pay or consider insolvency options such as company voluntary arrangement (a CVA), administration or other rescue options.
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