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Statutory Demand

The issue of a statutory demand upon a business or individual

A statutory demand is formal written demand for payment of a debt that exceeds £750
within 21 days. If the debtor does not pay within the 21 days, a creditor can present a
petition to the court for Bankruptcy or Winding Up.

When serving a statutory demand upon an individual it is sensible to use the services
of a process server who will provide evidence that the individual has been served.
When serving a statutory demand upon a company then it is usually acceptable to
serve the demand by Royal Mail Recorded or Special Delivery.

A statutory demand should not be used where there is a hint of a dispute. The use of
a demand in such circumstances is an abuse of process. The court is not concerned
whether the defence to the demand will succeed or not, but rather only that the
defence is genuine and not frivolous. It is not uncommon for sham defences to be
raised in response to a statutory demand and in these situations expert guidance is
required on whether or not a party should proceed with the demand or withdraw.

If a statutory demand is disputed by an individual then an application may be made
to the court to set aside such demand. There is no such equivalent procedure in
respect of companies who must apply to the Companies Court for either an injunction
restraining presentation of a petition or an injunction restraining presentation of the
statutory advertisements. Costs usually follow the event, i.e the successful party
recovers their (often substantial) costs from the losing party.

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