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Statutory demands for business

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A statutory demand is a formal written demand for payment of a debt which can be served on a company. Here we consider how to serve a statutory demand on a company and how a statutory demand might be challenged.

PLEASE NOTE the following is subject to amendments brought in by the Corporate Insolvency and Governance Act 2020. Please refer to the latest guidance or contact us for more information.

When (why) would I need this service?

A statutory demand is normally used where the creditor is owed a sum of money that: exceeds £750.00; is not disputed; and, the debtor has not made payment of the debt. By serving a statutory demand, the creditor is alleging that the debtor is unable to pay its debts. A statutory demand can be served on the following commercial entities:

  • A company registered in England & Wales;
  • A company whose centre of main interests in situated in England & Wales;
  • An unregistered company (which can include foreign companies). An unregistered company is defined as “any association and any company, with the exception of a company registered under the Companies Act 2006 in any part of the United Kingdom”; and
  • A limited liability partnership.

The debtor has 3 weeks to make payment of the debt once it has been served with a statutory demand. If the debtor fails to make payment, the creditor can issue a winding up petition against the debtor for it to be wound up by order of the court.

How does the process work?

When preparing a statutory demand, the insolvency rules dictate that the following key aspects must be included in the demand:

  • The name and details of the debtor must be correctly identified;
  • The creditor must provide their name and address;
  • A statement containing the amount of the debt;
  • Provide details of the debt and how it arose;
  • If the debt is founded on a judgment of the court, the date of the judgment and the name of the court it was obtained from; 
  • Details of any interest and/or any other charges that may be accruing;
  • A statement that the debtor has the right to apply to the court for an injunction restraining the creditor from presenting or advertising a petition for the winding up of the company; and
  • The name of the court (and hearing centre if applicable) to which, according to the present information, the company must make the application.

Most importantly, the statutory demand must be signed by the creditor or someone authorised by the creditor to sign the demand on their behalf. 

When serving a statutory demand, the rules dictate that a creditor must “do all that is reasonable to bring the statutory demand to the debtor’s attention and, if practicable in the particular circumstances, serve the demand personally.”

In practice, a process server is normally used to serve a statutory demand. However, it is important that the process server is instructed to serve the demand at the correct address. For example, if a statutory demand is to be served on a company, then it should be served at its registered offices.

How to challenge a statutory demand

If your company has received a statutory demand you will need to take immediate action. Below we set out some of the ways in which you may be able to challenge the statutory demand:

  • If the debt is genuinely disputed on substantial grounds, you may wish to consider applying for an injunction to prevent the creditor from issuing a winding up petition. Case law states that the dispute “must be real as opposed to frivolous”.
  • There may be procedural grounds on which the statutory demand can be challenged. For example, the statutory demand may not be served on you in accordance with the rules or the statutory demand may not contain sufficient information concerning the debt.
  • You can make payment of the debt. If you make payment of the debt, then you should seek confirmation (preferably an undertaking) from the creditor that they will not present a winding-up petition.
  • You may be able to negotiate a payment of the debt in instalments; however, you should be mindful that whilst negotiations are ongoing, the creditor has the ability to issue a winding up petition against you. Therefore, it is best to obtain confirmation from the creditor that they will not issue a winding up petition until negotiations are concluded.

How long does it take?

Once a statutory demand is served, the debtor has 21 days to take one of the steps above. After this, if the debt is still outstanding and no action has been taken by the debtor, it is open to a creditor to take formal insolvency proceedings against a debtor.

If you are a creditor who has served a statutory demand, then after the 21 day period has passed you can commence formal insolvency proceedings, however, you are not obliged to do so. If the statutory demand is over 4 months old it is usually wise to consider serving a fresh statutory demand before proceeding.

Is it expensive? What are the likely costs?

If you are a creditor and wish to serve a statutory demand on a company, please see our debt collection price guide, which sets out our fixed fees for preparing and serving a statutory demand.

If you are a company who wishes to challenge a statutory demand, we shall provide you with an estimate of our fees based on the type of work required.

Our lawyers have extensive experience in advising clients who wish to issue a statutory demand, along with those seeking to challenge a statutory demand. We will be able to provide you with bespoke and cost effective advice tailored to your circumstances.

Meet the Statutory demands for business team
Ray Crudgington
Managing Partner
greenwich
02083054224
ray.crudgington@grantsaw.co.uk
Maria Lati
Partner
Head of Residential Property
blackheath
02083054229
maria.lati@grantsaw.co.uk
Mike Clary
Partner
Head of Family
greenwich
02083054237
mike.clary@grantsaw.co.uk
Kalpa Prajapati
Partner
Head of Private Client
blackheath
02083053536
kalpa.prajapati@grantsaw.co.uk
Mario Savvides
Partner
Head of Commercial Property
greenwich
02083053531
mario.savvides@grantsaw.co.uk
Sarah-Kate Jackson
Partner
Head of Litigation
greenwich
02083054236
sarah-kate.jackson@grantsaw.co.uk
Adina-Leigh Collins
Litigation
Solicitor
greenwich
02083053556
adina-leigh.collins@grantsaw.co.uk
Aimal Gram
Commercial Property
Solicitor
greenwich
02083053524
aimal.gram@grantsaw.co.uk
Aisha Mohammed
Residential Property
Solicitor
greenwich
02083054228
aisha.mohammed@grantsaw.co.uk
Aishat Balogun
Aishat Balogun
Family
Solicitor
greenwich
02083054214
aishat.balogun@grantsaw.co.uk
An Le Tran
Commercial Property
Professional Support Solicitor
greenwich
02083054226
anle.tran@grantsaw.co.uk
Angus Young
Litigation
Solicitor
greenwich
02083054225
angus.young@grantsaw.co.uk
Atifha Aftab
Atifha Aftab
Family
Solicitor
greenwich
02083054238
atifha.aftab@grantsaw.co.uk
Bimal Kotecha
Litigation
Solicitor
greenwich
02083053523
bimal.kotecha@grantsaw.co.uk
Charlotte Mandy
Charlotte Warren
Private Client
Solicitor
blackheath
02083054231
charlotte.warren@grantsaw.co.uk
Claire Mac Mahon
Litigation
Solicitor
greenwich
02083053537
claire.macmahon@grantsaw.co.uk
Deborah Taite
Residential Property
Solicitor
blackheath
02083053542
deborah.taite@grantsaw.co.uk
Emily Pearce
Residential Property
Solicitor
greenwich
02083053526
emily.pearce@grantsaw.co.uk
Georgia Beales
Litigation
Paralegal
greenwich
02083054206
georgia.beales@grantsaw.co.uk
James McKimm
James McKimm
Corporate and Commercial
Solicitor
greenwich
02083054217
james.mckimm@grantsaw.co.uk
Jeremy Brooks
Jeremy Brooks
Private Client
Solicitor
blackheath
02083053534
jeremy.brooks@grantsaw.co.uk
Joanna Godden
Notary Public
Notary
greenwich
02083083535
joanna.godden@grantsaw.co.uk
Kim Whitaker
Kim Whitaker
Corporate and Commercial
Head of Corporate and Commercial
greenwich
02083053539
kim.whitaker@grantsaw.co.uk
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Mandeep Clair
Family
Solicitor
greenwich
02083054235
mandeep.clair@grantsaw.co.uk
Michael Pope
Employment
Consultant Solicitor
greenwich
02083053540
michael.pope@grantsaw.co.uk
Michelle Pinnington
Michelle Pinnington
Residential Property
Solicitor
greenwich
02083054216
michelle.pinnington@grantsaw.co.uk
Noella Gooden
Employment
Solicitor (Australian qualified)
greenwich
02083053543
noella.gooden@grantsaw.co.uk
Raj Waghela
Raj Waghela
Residential Property
Solicitor
greenwich
02083053529
raj.waghela@grantsaw.co.uk
Randeep Thethy
Randeep Thethy
Residential Property
Solicitor
greenwich
02083054209
randeep.thethy@grantsaw.co.uk
Ruggero Pesciatini
Ruggero Pesciatini
Corporate and Commercial
Paralegal
greenwich
02083054220
ruggero.pesciatini@grantsaw.co.uk
Sarah Conner
Sarah Conner
Private Client
Solicitor
blackheath
02083054234
sarah.conner@grantsaw.co.uk
Simran Lalli
Simran Lalli
Employment
Solicitor
greenwich
02083054208
simran.lalli@grantsaw.co.uk
Susan Collins
Commercial Property
Solicitor
greenwich
02083054200
susan.collins@grantsaw.co.uk
Tatiana Zenina
Tatiana Zenina
Private Client
Solicitor
blackheath
02083054239
tatiana.zenina@grantsaw.co.uk
Trisha Djemal
Trisha Djemal
Residential Property
Consultant Solicitor
blackheath
02083053546
trisha.djemal@grantsaw.co.uk
Tyrone Grant
Residential Property
Head of Leasehold Enfranchisement
blackheath
02083053522
tyrone.grant@grantsaw.co.uk
Denise
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@grantsaw.co.uk
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Kasia
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Michael Tobin
Michael Tobin
Support Staff
Marketing and Business Development Manager
greenwich
02083053550
michael.tobin@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk