Q&As

A bankruptcy petition is issued on the basis of an unpaid statutory demand. After the first hearing (which is adjourned) the debtor pays the sum demanded in the statutory demand. Since the first statutory demand was issued, further arrears have fallen due. Therefore, the creditor serves a further statutory demand which the debtor fails to pay within 21 days. Can the creditor rely on that statutory demand at the adjourned bankruptcy hearing or will a whole new petition need to be presented (as the debt on which the petition was originally based has been paid)?

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Published on LexisPSL on 29/07/2019

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • A bankruptcy petition is issued on the basis of an unpaid statutory demand. After the first hearing (which is adjourned) the debtor pays the sum demanded in the statutory demand. Since the first statutory demand was issued, further arrears have fallen due. Therefore, the creditor serves a further statutory demand which the debtor fails to pay within 21 days. Can the creditor rely on that statutory demand at the adjourned bankruptcy hearing or will a whole new petition need to be presented (as the debt on which the petition was originally based has been paid)?

In this Q&A, the second statutory demand was served on the debtor after the presentation of the bankruptcy petition.

Section 267(2) of the Insolvency Act 1986 (IA 1986) provides that ‘…a creditor’s petition may be presented to the court in respect of a debt or debts only if, at the time the petition is presented—’. There then follows a list of criteria that must be satisfied, and throughout that list is reference to ‘the debt’. Accordingly, it appears that a petition must be based on a qualifying debt (where, among other criteria, there must either be an unsatisfied statutory demand or unsatisfied execution of judgment) that existed at the time of presentation, and would not apparently include debts that have become subsequently due. A petition can be presented in respect of a debt due at some future by certain time, but the appropriate form of statutory demand would need to be used for that purpose.

A petitioning creditor cannot seek a bankruptcy order where the petition debt has been paid, but may still seek a bankruptcy petition where only part of the petition has been paid (see for example Lilley v American Express Europe Ltd).

In your circumstances, it does not appear th

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