Q&As

How, if at all, does payment of part of the debt stated affect a statutory demand for the purpose of presenting a bankruptcy petition?

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Published on LexisPSL on 22/05/2019

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

  • How, if at all, does payment of part of the debt stated affect a statutory demand for the purpose of presenting a bankruptcy petition?
  • What is a statutory demand?
  • Requirements/grounds for presenting a bankruptcy petition
  • Unpaid debt

How, if at all, does payment of part of the debt stated affect a statutory demand for the purpose of presenting a bankruptcy petition?

What is a statutory demand?

A statutory demand (in both corporate and personal insolvency) is a demand for a debt—either payable now, or payable at some future date—which is served on the debtor by one or more of their creditors. The purpose of the statutory demand is to establish that the debtor is unable to pay their/its debts and is therefore insolvent.

In both corporate and personal insolvency, failure by the debtor to pay the debt within 21 days of service of the statutory demand, satisfy/secure it to the creditor's satisfaction, or take the appropriate steps to prevent the creditor from acting further on it, will create a presumption of insolvency (on an inability to pay basis) of the debtor. Where the debtor is an individual, an unsatisfied statutory demand provides a creditor with one of only two grounds upon which a creditor's bankruptcy petition may be issued, or 'presented', against an individual.

Although a statutory demand should contain the prescribed matters set out in the relevant parts of the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, it does not need to be issued at court before being served on the debtor. Because of

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