Company statutory demand—the position under The Insolvency (England and Wales) Rules 2016
Produced in partnership with Eleanor Holland and Karl Anderson of 4 Stone Buildings
Company statutory demand—the position under The Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency guidance note Produced in partnership with Eleanor Holland and Karl Anderson of 4 Stone Buildings provides comprehensive and up to date legal information covering:

  • Company statutory demand—the position under The Insolvency (England and Wales) Rules 2016
  • Drafting and serving a statutory demand
  • When not to use a statutory demand
  • When a statutory demand is necessary
  • Content
  • Further information to be given
  • Service
  • Consequences of failure to act in relation to a statutory demand

This Practice Note sets out the position from 6 April 2017. It does not necessarily reflect the position pre–6 April 2017.

Drafting and serving a statutory demand

This Practice Note gives guidance as to when to use a statutory demand:

  1. the purpose of a statutory demand is to establish that a company is unable to pay its debts (rather than the creditor relying on s 123(1)(e) or s 123(2))

  2. a statutory demand is a written demand in the prescribed form for a debt in excess of £750 which is served on a company by leaving it at the company’s registered office (section 123(1)(a) of the Insolvency Act 1986 (IA 1986)). This figure is not affected by the increase in the bankruptcy level for bankruptcy petitions from £750 to £5,000 that came into effect on 1 October 2015

  3. if it remains unpaid and is not disputed the company is deemed to be unable to pay its debts and it gives a creditor the ability to present a winding-up petition against the company

When not to use a statutory demand

A statutory demand should not be used where:

  1. there is a genuine dispute as to the amount owed

  2. the company has a cross or counterclaim which equals or exceeds the amount due

  3. the company has a reasonable excuse for not paying