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ARTICLE · 16 AUGUST 2024

What Do To When You Receive A Statutory Demand

BP Collins
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A statutory demand is a formal request for debt repayment, often preceding bankruptcy or insolvency actions. Businesses or individuals must act swiftly—either by disputing the debt or negotiating payment—to avoid severe consequences, including winding-up or bankruptcy.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Dharum Basra
Dharum Basra

A statutory demand is a written demand for payment of a debt within 21 days. It is presented by a ‘creditor' to a business or individual that owes it money (the ‘debtor'). It is usually the first step in bankruptcy or insolvency proceedings. To serve a demand on a company, the sum owed must exceed £750, and for individuals it must be equal to or exceed £5,000.

Non-payment of a statutory demand can be used as evidence of a company's inability to pay its debts or in the case of an individual, to pay the debt demanded. In turn this can be relied on to wind-up a company or make an individual bankrupt. B P Collins' commercial litigation team explores what you should do if you receive one.

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