Statutory Demand
A Statutory Demand is a Creditors first step in enforcing their debt through the insolvency courts.
What is a Statutory Demand and How Serious is it?
A statutory demand is a formal written request from a creditor demanding payment of a debt owed by a company.
It serves as a preliminary step in the process of initiating winding up proceedings if the debt is not settled.
The seriousness of a statutory demand lies in its implications: if the debtor fails to pay the specified amount within 21 days, the creditor can use it as evidence of insolvency to petition the court for a winding up order against a company or a bankruptcy order against an individual.
Ignoring a statutory demand can lead to severe financial and legal consequences, making it crucial for recipients to address the demand promptly, either by paying the debt, negotiating with the creditor, or challenging the demand if there are grounds to do so.
I have received a Statutory Demand. What should I do?
Ignoring a statutory demand can lead to severe financial and legal consequences, making it crucial for recipients to address the demand promptly, either by paying the debt, negotiating with the creditor, or challenging the demand if there are grounds to do so.
1. Paying the Debt
A Statutory Demand is most often issued because a debt cannot be paid. it is rare that our clients simply refuse to pay. If there is a refusal to pay due to a discrepancy or a dispute, we can arrange for this to be addressed and make the creditor aware.
2. Negotiating With The Creditor
If you are in a position to negotiate with your creditor, effective negotiation is key to the cancellation of a Statutory Demand. Simply making an offer to pay may not be enough.
3. Challenge the Demand
Effective challenging of a Statutory Demand requires an application to the court for the demand to be set aside. This requires experience and expertise and should be completed by a professional insolvency specialist.
Can a Statutory Demand lead to insolvency?
Yes. A Statutory Demand is an indication that a creditor is intending to Wind Up your company.
Once a company enters insolvency, the company and its transactions will be investigated to identify the reason for insolvency. There may often be legitimate reasons such as a downturn in the market of the loss of a large contract however; a directors conduct can be called into question if it is identified that the director has not acted in the best interest of the company and the failure is down to his/her wrongdoing.
A liquidator will review all transactions including but not limited to any debt taken into the company such as bounce back loans. If the liquidator is not satisfied that the company has been run appropriately, the directors may be referred to the Insolvency Service which can lead to a number of measures including Director Disqualification and/or a Fine.
If the liquidators suspect that a director acted unlawfully or inappropriately, they could make an application to the court to hold the director personally liable for the transactions
Been Issued a Statutory Demand?
Contact Us Immediately on
03330 140313
Kingsley acted quickly and structured a solution
I was faced with not being able to trade anymore and had a number of creditors that were impacted.
Kingsley Legal Group acted quickly and built a tailored solution for a structured exit.
Act Fast for Immediate Advice.
A Statutory Demand is a very clear indication that a creditor is looking to force your company into a form of insolvency. At Kingsley Legal Group, we offer a number of dynamic strategies in stopping a Statutory Demand and restricting your creditors from proceeding to Wind Up your company.
Our team are supported by an approved panel of leading lawyers and insolvency specialists to act quickly, minimising risk and exposure to insolvency.
Contact us today by calling 03330 140313 or book an appointment with our team here
