Understanding the value for which a statutory demand can be issued is an important part of your overall recovery strategy. Our team can advise you on this and all other aspects of statutory demands
Individual statutory demand
- at present, the bankruptcy petition minimum amount is £5,000 for an individual;
- therefore, creditors using statutory demands against individuals normally do so on debts over £5,000 as otherwise a statutory demand debtor who knows the rules knows that if they fail to pay a statutory demand for less than £5,000 it doesn’t matter as the creditor cannot follow through with a bankruptcy petition.
Company statutory demand
With respect to a company, the position is better.
- if a statutory demand is served against a company and the statutory demand debt is still not paid, then the next step which can be taken is to issue a winding up petition or winding up order;
- at present, the winding up petition minimum amount is £10,000 for a company (an increase on the previous longstanding figure of £750). The increase might just be a temporary one until the end of March 2022.
Therefore, creditors using statutory demands against companies should really only do so (at least until March 2022) only on debts over £10,000. Otherwise – there is no ability to follow up non-payment with a winding up petition.
In summary, whilst there is no statutory demand minimum debt level, normally creditors will use them when
- the statutory demand level is over £10,000 for a company; and
- over £5,000 for an individual.
However, there is nothing stopping a creditor serving a statutory demand for less than £5,000 on an individual, as the threat of the statutory demand may prompt payment, especially if the debtor does not understand the bankruptcy petition minimum fee limits. The same is true for companies – you can issue one for less than £10,000 and hope the debtor pays up.
Service of a statutory demand can often still lead to payment and can be far quicker than proceeding by way of a small claim case. As the costs of the statutory demand process are relatively low, it can make sense to proceed with one first to see if the debt is paid rather than proceed in the small claims court.
Please contact one of our expert lawyers now for your helpful consultation. We offer fast and effect advice, whatever your situation.