Statutory demands can be set aside if a debt is genuinely disputed. Our team of experts successfully advises clients on all types of set aside applications. Let us help you too.
Statutory demand individual – disputed debt
For individual statutory demands, a creditor cannot issue a bankruptcy petition based on the statutory demand if the debt is
- disputed on substantial grounds; or
- the debtor has a counterclaim or set-off that would reduce the debt to less than £5,000 (being the limit for bankruptcy petitions to be issued).
Statutory demand company – disputed debt
In respect of a company, if the company has a valid reason for not paying the debt, then a winding up petition should not be presented. A valid reason may arise where either:
- The debt is genuinely disputed on substantial grounds; or
- The company has a genuine cross claim against the debtor.
In terms of what constitutes substantial grounds, this effectively means the dispute must be real as opposed to simply “frivolous”. A mere honest belief that payment is not due is not sufficient to oppose the statutory demand.
If only part of the debt is disputed and the company fails to pay the undisputed element, then it is possible to issue a winding up petition for that undisputed amount which has not been paid. It can be used as evidence that the company is unable to pay its debts as and when they fall due.
Our team at Francis Wilks & Jones are experts when dealing with disputed statutory demands. Whatever your situation, let us help.
