In tough financial times, a company may get a statutory demand from creditors, which is more like an ultimatum for unpaid debts and dues. Typically, a statutory demand is served with the help of a process server, as it cannot be sent by post. It can be handed over the company director, secretary, or principle officer, or can be left at the registered address of the concerned business. Process servers are used as they can confirm proper service to the court.
Dealing with a statutory demand
From the date on which the statutory demand is serviced, the company has 21 days to repay the sum as stated. If the balance is more than £750, creditors can choose to issue a winding up petition against the company, in case the sum is not paid within 21 days. Eventually, the company can be placed in formal insolvency proceedings, and the assets will be sold off to repay the debts.
There are three possible options of responding to a statutory demand form –
- To repay the debt within 21 days as mentioned
- To negotiate a possible payment plan with the creditors
- To apply for an order to set the statutory demand aside
Businesses with considerable debts should consider discussing payment options with creditors in advance to avoid the situation involving a statutory demand, says the team of Business Rescue Experts. The only situation in which the concerned company can avoid or refuse to respond to a statutory demand is when the business is already insolvent. Even in that case, company voluntary arrangement might work better as far as timings are concerned.
Setting aside a statutory demand
In case the company chooses to dispute a part of the debt listed on the form, there is an option to apply against the statutory demand, which can be set aside. An application must be submitted to the court within 18 days of service, with all relevant details. Evidences and material information should be furnished. Keep in mind that the concerned creditors will also have their chance to present their case. If the statutory demand should stand, the court may pass a costs order, which only adds to the debt of the company. However, if your solicitors win the case, a costs order will be issued against the creditors.
You can apply to set a statutory demand aside when –
- The debt is disputed
- The amount owed is less than £750
- There is a counterclaim against the due
- The statutory demand hasn’t been prepared or served properly
Check online now to find services that can help your business after getting a statutory demand form.