Preparing and serving a statutory demand is a prelude to issuing a winding up petition for an uncontested debt of over £750.00.

Statutory demands must be in a particular format and must be formally served on a company debtor by the creditor. A statutory demand is 1 of the 2 forms of necessary precursor to issuing a winding up petition against a company. The 2nd is where the creditor has a court judgment against the debtor company. For both, the debt must be over £750.00.

Once a valid statutory demand has been served on a company, it has 21 days to pay the debt or 18 days to dispute the debt and ask for it to be set aside by the court. If neither of these actions is taken, the creditor can then escalate the situation by issuing a winding up petition against the company. Ultimately, this could lead to the liquidation of the debtor company.  

If your company has been served with a statutory demand, you should consider all your options urgently. Prompt action and clear communication with creditors may prevent the situation escalating.


Statutory Demand Form

The correct form of statutory demand to complete and serve on a company can be downloaded on the .GOV website here.

Can a Statutory Demand Against a Company Be Set Aside?

Yes and the most common way for a debtor to seek to set aside a statutory demand is on the basis that the debt is disputed. A statutory demand is not supposed to be used unless the debt is undisputed. For this reason, the types of creditors who tend to use statutory demands most regularly are HMRC, banks and other forms of lenders where the ability to dispute the debt is low.

Before applying to the court to set aside a statutory demand a debtor should contact the party who served it demanding it be withdrawn, with a deadline to do so. In some cases the party serving will agree and comply, but if not, an application to set aside can be made.

In principle if the company is successful in having the statutory demand set aside then the creditor will have to pay the debtors legal fees. Alternatively if the company fails to have the ‘demand’ set aside then the company will be liable for the creditors costs.

What happens if I Don’t Pay?

Failure to pay the amount demanded in a statutory demand withing 21 days after lawful service constitutes evidence that the company is insolvent and enables the creditor to proceed to issue a winding up petition.

What are The Options After Receiving a Statutory Demand?

(1) Pay the Debt in Full Or Negotiate with the creditor

This is obviously what the statutory demand is intended to provoke, so if you can pay the debt, you should.

(2) Negotiate a Payment Plan with Creditors

By accepting your responsibility to pay the debt, while explaining your inability to settle it all at once, many creditors are open to a payment in instalments.

(3) Consider an Insolvency Proceeding such as:

Company Voluntary Arrangement – A Company Voluntary Arrangement is a process whereby an IP helps you negotiate a long term payment plan with creditors, while protected from further creditor action by a legal ring-fence.

Administration – Administration allows larger companies to be restructured by an Insolvency Practitioner, while protected from legal action, with the goal of turning the businesses fortunes around.

Voluntary Liquidation – If the statutory demand brings with it the realisation that your company is insolvent, you may wish to voluntarily liquidate while you still can. Once a winding up petition has been delivered, this possibility will have vanished and you will have even less control over your future.

Do You Need Free, Confidential Statutory Demand Advice?

If you have received a Statutory Demand against your company please contact us to find out what can be done about it on 0800 074 6757; email us at; use the Live Support at the bottom of the page.