A statutory demand can be served by anyone who is owed money from a company. If that creditor is owed more than £750 then they will also be able to issue a winding up petition if their debt isn’t paid, or if there isn’t a valid counterclaim against them.
How will I be served?
A statutory demand must be either given to you in person, or left at the registered address of the company, or served at the main place of business if there isn’t a registered office by giving it personally to a company director secretary manager or principal officer. It is usual to get a process server to serve a statutory demand to make sure that this is done properly. It can be sent by post but only by registered post if it is not possible to be delivered in person.
What happens if I ignore the statutory demand?
If you do nothing and there is a genuine debt, then after 21 days your creditor can apply to the court for a winding up petition on the basis that they haven’t been paid following the statutory demand.
How do I challenge the statutory demand if I don’t agree with it?
Unlike bankruptcy, if you are a director of a company served with a statutory demand there isn’t a prescribed process to set this aside. You therefore have the following options if you are served with a disputed statutory demand:-
- Pay the debt, or reach a settlement with the creditor who has issued the statutory demand against you. This is one way of avoiding being wound up.
- If settlement is not appropriate and you believe that the creditor will take further action, then make an application for an injunction restraining the presentation of a winding up petition, and/or restraining the advertisement of the winding up petition if the petition has already been issued.
Acting quickly is the key to success
Whatever the situation, it is vital that you act quickly and take the correct legal advice if you dispute the debt. If you genuinely dispute the debt, then you should draft a letter to the creditor saying why and setting out as much detail as possible. Our team of liquidation experts at Francis Wilks & Jones can help you with this. The letter must contain the correct information.
It may be possible to settle, even if you agree some of the debt but not all of it. Any settlement would have to be on the basis that the creditor agrees not to issue a winding up petition. Again, taking expert legal advice is key to ensure that this is done properly, to avoid a winding up petition being brought.
If there is a genuinely disputed debt then it is far more better for all if this can be dealt with before a winding up petition is issued. It may well be that when it comes to the date of the winding up hearing a judge will agree that the debt is disputed and must be resolved first, but by that time a lot of damage to the company will have already occurred, following the advertisement of the winding up petition.
If you are issued with a statutory demand for a debt against your company then it is vital that you act quickly and take appropriate legal advice on your position. No matter how dismissive you may be of the debt, a statutory demand is a pre-cursor to a winding up petition, which should always be taken very seriously. Contact our expert team today who can discuss with you your options and act on your behalf to prevent any damage to your company.
