If a creditor already holds security for a debt - then it might not be possible to proceed with a statutory demand. Our experts can help advise on this question, and avoid mistakes being made
Rule 10.1(9)(b) of the Insolvency Rules 2016
Rule 10.1(9)(b) of the Insolvency Rules 2016 deals with the position where the creditor already holds security in relation to the debt claimed
- the rule states that as part of preparing the statutory demand for either an individual or company, it is important that the full amount of the debt claimed in the statutory demand is stated less the value that the creditor attributes to the security it holds;
- this relates to any security that the creditor holds in respect of the property of the debtor and does not include security held over any third party.
It is not always fatal to the prospects of the statutory demand if the security is not referred to but it is always wise to make sure that any security held (such as a charge over the debtor’s property) is set out in the statutory demand.
The rules affecting future bankruptcy petitions
If later on, the statutory demand is not paid and a bankruptcy petition is issued, then the bankruptcy petition itself can be issued based on the debt being secured but only if:
- The bankruptcy petition contains a statement by the secured creditor that s/he is willing in the event of a bankruptcy order being made to give up his security.
- The petition is actually only being issued for the portion of the debt which is not subject to the security.
Insolvency Rule 10.1(9) – in full
If the creditor holds any security in respect of the debt, the full amount of the debt shall be specified, but
(a) there shall in the demand be specified the nature of the security, and the value which the creditor puts upon it as at the date of the demand, and
(b) the amount of which payment is claimed by the demand shall be the full amount of the debt, less the amount specified as the value of the security.
For all your requirements relating to statutory demands, call one of our expert statutory demand lawyers now and we can assist you. We can assist in the area of security and statutory demands – once which is vital to understand to avoid inadvertently making matters worse.