Statutory Demand

As a growing business itself Hodge Halsall recognizes the need for a quick and effective debt recovery service.   For undisputed debts we will often recommend an aggressive recovery approach including the use of insolvency proceedings beginning with the service of a statutory demand upon the debtor.     

What is a Statutory Demand?

 

A formal written demand for payment of a debt that is undisputed and already due for payment.     A court judgment is not necessary.      If the debt is in dispute the person upon whom the demand is served can apply to a court to have it set aside and, if successful, will usually obtain an order for costs against the creditor.     Where, however, the debt is not disputed a statutory demand is a powerful tool as a failure to pay within a twenty one day period after service can lead to a bankruptcy petition being issued. 

A statutory demand may only be issued for a debt of £750.00 or more. 

What are the formal requirements of a Statutory Demand?

 

The Insolvency Act 1986 provides that where the debtor is an individual two forms of Statutory Demand may be served :-

(1)        A statutory demand served under Section 268(1) for a debt payable immediately and following a Judgment or Order of a Court should provide full details of that Judgment or Order.

(2)        A statutory demand served under Section 268(2) in respect of a debt not payable under a Judgment or Order of the Court and which must state the grounds upon which it is alleged that the debtor appears to have no reasonable prospect of paying the debt.

In either event the Statutory Demand must be signed either by the creditor himself or a person authorized to make the Demand on behalf of the creditor (e.g. Solicitor) and dated.   The amount of the debt for which the Demand is made must be stated and the consideration for how the debt arose should be provided.  

If the Statutory Demand includes a claim for interest not previously notified to the debtor the amount being charged and the grounds upon which it is claimed must be stated.    

If the Creditor holds any security in respect of the debt the nature of the security and the value placed upon it at the date of the demand should be specified.  

What if the debtor is a company?

 

A Statutory Demand in appropriate form may be served upon a corporate debtor again stating the amount of the debt and the consideration for it. 

Service of the Statutory Demand?

 

If bankruptcy or winding up proceedings follow the Statutory Demand proof of service of the demand must be provided to the Court.   If the Court is not satisfied that the demand has been adequately served the Petition may be rejected. 

Please contact us for further information.