Q&As

If a creditor puts both the name of the director and the name of the company as the creditor in the statutory demand, is this likely to have an effect on the bankruptcy petition as the debt is owed to the company?

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Published on LexisPSL on 08/04/2021

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

  • If a creditor puts both the name of the director and the name of the company as the creditor in the statutory demand, is this likely to have an effect on the bankruptcy petition as the debt is owed to the company?

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. 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. Although a statutory demand should contain the prescribed matters set out in the relevant parts of the Insolvency Act 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 this, it is often described as a 'quasi-judicial' document.

The basic requirements of statutory demands are that they should only be served on the debtor where the debtor owes to the creditor a qualifying debt, and that debt is not disputed and/or that there is no cross or counterclaim which equals or exceeds the debt demanded.

A statutory demand to be served on an individual debtor must contain the information set out in IR 2016, SI 2016/1024, r 10.1:

  1. the name and address of

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