If your company has too unpaid and pending debts, creditors can send a statutory demand, which is an ultimatum for the payment. Typically, a process server is hired for serving the statutory demand, which cannot be sent by post. In case of a company, it can be served to the registered office, or must be handed over to a company director, secretary or principle officer. From the day of service, the company has 21 days to repay the sum demanded. If the company doesn’t respond to a statutory demand, creditors can issue a winding up petition, after which the formal insolvency proceedings will start, and assets will be sold to repay the debts.
After receiving a statutory demand
There are three ways that you can respond to a statutory demand, says the team of Business Rescue Experts. The first option is to repay the debt as per the demand within 21 days, while you can also exercise the second choice, which is about discussing and negotiating a payment plan with creditors. The third option is to file an application in the court to set the statutory demand aside. A statutory demand should be taken seriously, except winding up of the company is an eventuality.
How to set a statutory demand aside?
An application must be filed in the court to set the statutory demand aside. This must be done within 18 days of the service of the statutory demand and only when the concerned company has enough grounds. Do not use this option to delay your payments, because a costs order can be made, which will only increase the debt. Grounds to set aside a statutory demand include –
- When the debt is disputed
- When the owned amount is less than £750 for a company
- When there is a counterclaim against the debt due
- When the statutory demand has not been prepared and served properly
The application should include as much detail as possible, including evidence. Bear in mind that the creditor will also have their chance to prove their case. If the case is in favor, the creditors will get an appropriate costs order. For the other situation, the creditors issue a winding up petition against the company.
You can go for the options of voluntary arrangement, if the statutory demand cannot be set aside, but the options can be limited if a winding up petition is issued. Check with the right services for help.
