Statutory Demand Solicitors
If you’re facing delays in receiving payments from a debtor, a statutory demand could offer a quick, cost-effective method to recover the monies owed.
For debts over a certain amount, serving a statutory demand is a common first step toward initiating a winding-up petition for companies or a bankruptcy petition for individuals.
At Lawhive, we understand the importance of timely debt recovery. Our network of expert commercial solicitors can guide you through the statutory demand process, ensuring compliance with legal requirements and maximising your chances of success.
Contact us today for a free case evaluation and quote.
What is a statutory demand?
A statutory demand is a formal request for debt served on a debtor.
When can you make a statutory demand?
You can make a statutory demand to request debt payment from an individual or company.
Typically, creditors must send this demand before pursuing bankruptcy proceedings.
Depending on your course of action, a debtor has either 18 or 21 days to respond to the demand and pay the debt or reach an agreement to pay.
If a statutory demand is not addressed within 21 days this can be interpreted as evidence that the debt can’t be paid, and the creditor may proceed with bankruptcy proceedings or close (wind up) their company.
Do you need a solicitor to make a statutory demand?
You don’t need a solicitor to use a statutory demand, however depending on the amount of money owed and the circumstances it might be a good idea to seek legal advice from a solicitor to understand your position and options better, especially if the matter is likely to end up in court.
A statutory demand does not always guarantee the debtor will pay and may be challenged. A solicitor can provide personalised advice to help you make an informed decision.
How to serve a statutory demand
To serve a statutory demand form, you must deliver it to the individual who owes you money, attempting all known addresses.
If you're serving a statutory demand on a limited company, you should leave it at the registered office of the company or their main place of business if they don’t have a registered office. Alternatively, you may give it to the company’s director, company secretary, manager, or principal officer.
It’s important to note that you can only send a statutory demand by registered post or put it through a letterbox if you can’t deliver it in person.
Before resorting to these methods, exhaust all of your options, including enlisting a process server to serve the statutory demand on your behalf. A solicitor can arrange this for you if needed.
Furthermore, you should keep a copy of the statutory demand and related records to prove it was served such as the date and time you served it and any other evidence that confirms the debtor received it.
On an individual or partner in a partnership
To serve a statutory demand on an individual, which form you serve depends on whether the debt is:
Payable immediately
Payable immediately following a judgment or court order
Payable in the future, with concerns about their ability to pay when due.
If you’re serving a demand on a business partnership, you should complete the appropriate form for each partner.
On a limited company
If a limited company owes you money, you can use Form SD1 to demand payment within 21 days.
What if a debtor doesn’t respond to a statutory demand?
If your debtor fails to respond to your statutory demand within 21 days you can either:
Start bankruptcy proceedings if an individual owes you £5,000 or more.
Wind up a company for debts of £750 or more owed by a company.
You have a window of four months to apply for bankruptcy or wind up your debtor. If you miss this deadline, you’d have to explain the delay to the court specified on the statutory demand and it would be up to them if they let you proceed or not.
Can you serve a statutory demand abroad?
To successfully serve a statutory demand abroad you must comply with both local and UK rules. This can be complex, so it’s essential to find a solicitor who can guide you through this process and make sure it’s done correctly.
At Lawhive, our network of lawyers is on hand to advise and support you to serve a statutory demand for fixed fees. Get in touch for more information and a free no-obligation quote today.
Can a statutory demand be challenged?
If an individual disagrees with a statutory demand, they can apply to challenge it and have it ‘set aside’. They must apply to challenge the statutory demand within a specific timeframe using form IAA.
Following a challenge, a hearing will be scheduled where both sides present their case to a registrar or judge. A decision will be made, either immediately or after further evidence is presented.
A successful challenge of a statutory demand will result in the demand being set aside and the debt repayment deadline suspended. If unsuccessful, the debtor must pay the debt within the specified timeframe.
Companies can’t challenge a statutory demand. Instead, they must apply to prevent creditors from winding up their company.
What are the advantages of using a statutory demand to recover debts?
Serving a statutory demand can be a quicker and more affordable way to prompt debt repayment compared to going to court.
What’s more, once served, the debtor has 21 days, putting an official time limit before proceedings escalate, which can be effective.
A statutory demand also brings with it the threat of bankruptcy for individuals or winding up for companies, which can provide a good incentive for debtors to arrange a repayment plan or engage in settlement negotiations.
What are the disadvantages of using a statutory demand to recover debts?
Using a statutory demand to recover debts has drawbacks that creditors should consider carefully.
Firstly, statutory demands may not apply to smaller debts and can’t be used for unliquidated debts where the exact amount is unknown or unquantifiable.
Moreover, creditors looking to serve a statutory demand on a company should weigh the potential impact on their business relationships with debts as it may affect ongoing agreements or future business opportunities.
Finally, creditors should be aware that if the debt is not paid then they would need to take further action, such as presenting a bankruptcy petition or wind-up petition, which can substantially increase costs.
So, while statutory demands can be effective in debt recovery, they have limitations and potential risks.
Therefore, seeking legal advice early in the process can help you understand all the options available to you, including serving a statutory demand, and how you might go about mitigating the risks associated with such action.
How effective is a statutory demand for CCJ debt?
Using a statutory demand to recover debts after winning a court judgment can be powerful and cost-effective.
By using a court judgment as a basis, disputes over the debt are eliminated, allowing swift enforcement.
What should be included in a statutory demand?
A statutory demand should include certain aspects as per the Insolvency Rules 2016 to create a valid demand for debt recovery purposes. It should include:
A label showing it as either a ‘Statutory demand under section 268(1) (debt payable immediately) of the Insolvency Act 1986’ or ‘Statutory demand under section 268(2)(debt not immediately payable)’
Name and address of the creditor and debtor
How much the debt is and its basis
Grounds for the debtor’s inability to pay (under section 278(2))
Details of any assignment of the debt
Notification of potential bankruptcy proceedings if the demand is not met.
Deadline for compliance.
Information on the debtor’s right to challenge the demand in court.
Specification of the court for challenging the demand.
The time frame for challenging the demand (within 18 days).
Warning of bankruptcy consequences if the demand is not addressed within 21 days.
Get help from Lawhive to recover your debt
At Lawhive, our network of lawyers can help you quickly and affordably recover unpaid debts from individuals or companies.
Whether you need help issuing or defending statutory demands, we have legal professionals on standby who can provide comprehensive legal advice, support, and representation throughout the legal process.
Contact us today to explore how we can help quickly and for fixed fees, so you can quickly and effectively secure the resolutions you seek.