Note following receiving
a statutory demand
This is a preliminary advice note
and is not a substitute for taking detailed legal advice in relation to your
situation, which may be legally complicated.
A statutory demand is a
prescribed form which generally must be personally served. This provides for the recipient, which may be
an individual or a company, with 21 days to pay (or compromise) the sum claimed to the
satisfaction of the creditor, failing which the creditor will be entitled to
issue an insolvency (bankruptcy or winding up) petition.
If the debt is disputed, then
either an application needs to be made to the Court to set aside the statutory
demand (if served upon an individual) or an injunction application needs to be
made to the Court (in the case of a company) to prevent the issue of a
It is not a very high hurdle to
overcome in order to successfully resist a statutory demand. However, in view
of the importance of the situation, legal advice should be sought as a matter
Generally a letter to the
creditor or the creditor’s solicitors setting out the legal grounds upon which
the debt claimed is disputed is sufficient to secure an agreement that no
petition will be presented without giving an agreed period of prior written
notice. This will provide an opportunity for further information and evidence
to be exchanged between the parties and hopefully which will result in the
statutory demand being agreed to be withdrawn.
However if the statutory demand
is not withdrawn or no such undertaking is given by the creditor or creditor’s
solicitors then an application will need to be made- in the case of an
individual to set aside a statutory
demand or in the case of a company
an injunction will have to be applied for from the Court. The legal test is in
essence whether there is an arguable defence/counterclaim to the debt which
will reduce the amount claimed to below the insolvency limit of £750.
Responding to statutory demands
can be quite difficult. Depending upon the circumstances it is always best to
instruct a solicitor with experience in dealing with this type of situation.
Insolvency represents a core area
of the work of this firm.
We offer an initial fixed fee interview
of half an hour at a cost of £75 plus VAT.
We are pleased to undertake this by way of a telephone conference is
this should be more convenient.
If you would wish this firm to
assist please contact Lawrence Rodkin (partner).