Disputed statutory demands

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Disputed statutory demands
  • Coronavirus (COVID-19)
  • What is a disputed debt and what is a good debt for the statutory demand?
  • Steps to take when a disputed statutory demand is served on an individual
  • Steps to take when a disputed statutory demand is served on a company

Disputed statutory demands

When either a company or an individual is served with a statutory demand, the warning bells should be ringing, as failure to act on that demand within 21 days (for debtors based in the jurisdiction of England and Wales) could lead to winding-up and bankruptcy proceedings being commenced against that company or individual, respectively. Where a debt is genuinely due from the debtor to the creditor, then steps should be taken to either pay the debt, or make arrangements with the creditor to settle it, failing which insolvency proceedings could be commenced.

There may be situations where a statutory demand is served on the debtor when it shouldn't have been (ie because the debt is not due, or the debtor has a counter/cross-claim which equals or exceeds the creditor's claims, or for some other substantial reason). Where this situation arises, the debtor will need to take urgent steps to ensure that the insolvency proceedings are not commenced. The steps might include (subject to time constraints) the following:

  1. contacting the creditor to fully set out why the debt is not due (and/or that there is a counter/cross-claim which equals/is greater than the debt demanded) or that there is some other reason why the statutory demand is disputed and to seek an undertaking that the creditor will not commence insolvency proceedings. The advantage of this

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