Statutory Demand: The Time For A Re-think?

A statutory demand is often perceived as a powerful weapon which the Insolvency Act 2009 ('Insolvency Act') has placed into the hands of a creditor to secure the prompt settlement of a debt. Indeed, it has the effect of unduly pressurising a debtor to settle its debt swiftly for fear of facing a creditor's application to the Bankruptcy Division of the Supreme Court ('Court') to liquidate the debtor through this 'fast-track' weapon the more so that the Insolvency Act has created a presumption of insolvency which operates against a debtor who does not comply with a statutory demand.

This therefore triggers the consideration whether the time has come for a re-think of our insolvency culture and consider alternatives such as the US Chapter 11 Bankruptcy Code or UK restructure plan to help economies and businesses re-build as a result of the formidable financial crisis which the COVID-19 has brought about in its wake.