Quick Things Worth Knowing About Setting A Statutory Demand Aside


In case you have pending and unpaid debts, creditors can choose to send a statutory demand, which is more like an ultimatum for the payment. A statutory demand must be handed over to the concerned individual or should to be left at the registered office of the limited company. It can be also served to a company director, secretary or officer. In most cases, process servers are hired for serving, as they can confirm proper service to the court.

From that date, the company/individual has 21 days to repay the debt. In case the debt exceeds £5,000 or £750 for company or individual respectively, creditors can submit for a winding up petition/ bankruptcy petition. The company would end up winding-up insolvency proceedings, and assets will be sold to pay of the debts.

Responding to a statutory demand

When a company wants to avoid a winding up petition, there are three basic ways of responding to a statutory demand-

  • Pay the debt as per the statutory demand within 21 days
  • Talk to the creditors for a possible payment plan
  • Apply in the court to set the statutory demand aside.

Business Rescue Experts, a known service that helps in such cases, recommends businesses to take a statutory demand seriously. If the debt cannot be repaid on time, an arrangement can be made with the creditors, if both sides agree. The only reason why a company would not respond to a statutory demand is when the winding up of the setup is already decided. Even in that case, creditors voluntary liquidation might be a better option.

How to set aside a statutory demand?

An application must be filed in the court with the statutory demand within 18 days of service for the same. A company must have good grounds for the case, because if this is just a tactic to delay the payments, the court can pass a cost order, which will only increase debts. In the following cases, a statutory demand can be set aside –

  • The debt is disputed
  • The debt is less than £750 in case of a company/less than £5,000 for an individual
  • There’s a good counterclaim involved
  • The statutory demand wasn’t served or prepared as required

The process of filing the case for setting the statutory demand side should be well thought and all relevant and important details must be mentioned. If the court doesn’t rule in your favor, creditors can proceed with the winding up petition. You can consider voluntary arrangement, but that should be done as soon as possible.

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