Statutory demands and winding up proceedings
There are a number of things to consider when deciding whether to go first for a statutory demand against a company or to go straight for a winding up petition against a company. These include:
- A winding up petition is a formal issued document at Court and as such, incurs a court fee to issue it. At present, the court fee including the Official Receiver’s deposit is £1,880. Coupled with the process server fee and solicitors costs of issuing, this can mean upfront costs over £2,000 to commence the winding up petition process. Statutory demand costs are much lower, in the region of £500.
- However, a winding up petition is more “hard hitting” than a statutory demand and can immediately get a debtor’s attention – and far quicker than may be the case with a statutory demand.
- If the debtor pays the winding up petition debt (or part of it), you have a good argument for payment of the winding up petition costs in full. This isn’t always the case in statutory demands.
- A statutory demand is less risky in the sense that if it becomes “disputed”, it is easier to pull out of a statutory demand than it is a winding up petition as it is not a formally issued court document.
- With a statutory demand, if it goes unanswered after 21 days, then a creditor is entitled to deem the debtor insolvent and unable to pay its debts. With a winding up petition, if a statutory demand has not been served first, then it may be the case later on that the petitioning creditor is asked to prove that the company is insolvent on a balance sheet basis. By serving a statutory demand first, it removes this requirement to prove that the company is unable to pay its debts pursuant to Section 122(1)(f) of the Insolvency Act 1986.
- A statutory demand is a good way to try and flush out any potential arguments that the debtor may have in circumstances where it is simply failing to respond to pre-action letters. It can also help avoid the often slow county court or small claims court process.
- A winding up petition will get you straight to the front of the queue if there are other creditors also after the company. With a statutory demand it might just give the debtor another 21 days to avoid making payment.
It is therefore always a balance as to whether to proceed firstly with a statutory demand against a company or whether to go straight for a winding up petition. Whatever you current circumstances, at Francis Wilks & Jones we can provide practical advice as to whether to go firstly with the statutory demand process or go directly to the winding up procedure.
Contact an expert statutory demand solicitor now
Our expert team of statutory demand solicitors at Francis Wilks & Jones are here to help you with any type of statutory demand enquiry or question. Contact one of our expert friendly statutory demand lawyers now for your confidential statutory demand consultation. Whatever your statutory demand requirements, we can show you stat demand examples of similar cases we have successfully assisted with. Call us now. We are here to help.
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