Does service of a statutory demand stop a claim then being issue
Normally the expiry of a statutory demand leads to the presentation of a bankruptcy petition (if against an individual) or winding-up petition (if against a company).
However, there is no obligation on the creditor to do this. Often a statutory demand is used to “shake the tree” and try and get quick payment. However, moving to a bankruptcy petition or winding up petition involves high court issue fees (£1,270 and £1,880 respectively) and this can put creditors off going down that route.
County court issue fees are far lower and a creditor might simply want to try and secure a Judgment against the company or individual which in turns opens up other recovery options – the use of the High Court Enforcement Office, attachment of earnings order and charging orders against property.
However, if a creditor decides that it does not wish to proceed with the statutory demand, it might consider making it clear that the demand is withdrawn – as there is an outside risk that the may apply to set aside the statutory demand (if an individual), or seek an injunction to restrain presentation of a winding-up petition (if a company). This could lead to unnecessary costs being incurred – one ones which the creditor does not want to be liable for.
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