Statutory Demand

A statutory demand Rule 10.1 Form SD 2 under section 268 (1) (a) of the insolvency act 1986,is the first step to personal bankruptcy for a debt over £5000. or if the demand is against a limited company Rule 7.3 Form SD 1 section 123(1)(a) for the winding up of a company, if your company has a debt over £750 this is prepared and served without any court involvement.

What is a debt?

A debt is a Liquidated sum payable by agreement (Typically in a contract) A Statutory Demand can be served as soon as the debt is due or in advance of an upcoming debt, without warning and a County Court Judgment is not necessary, unless it is for a debt regulated by the Consumer Credit Act 1974. If you dispute the debt you can apply to the County Court for the statutory demand to be set aside. If it is for a LTD company you need to apply to the High Court for an Injunction. The court will halt the bankruptcy or winding up of your company if there is real prospect of putting forward a defence or the debt is disputed in full. Even debts from countries in the United Arab Emirates like Dubai can enforce their debt in England. You will need expert help in applying to have the Statutory Demand set aside. If you make an application to the court it is essential that you are able to show that the debt is in dispute and has a real prospect of a defence or the Court will not grant you a hearing.

How much time do you have to respond.

The “Rule of Service” You have 18 days from the date of service or 21 days for a Limited Company.

We have 80% of demands withdrawn in our first stage without the need for a Court Hearing.

We always use a Barrister for any Court Hearing you are not required to attend.

If the demand is against your limited company then you would be required to apply for a High Court Injunction and provide evidence that your company was solvent.

The creditor that has issued the Statutory Demand has done so at some cost and so it is highly likely that they believe you or the company is “good for the debt” for example they must know that:

• You are a home owner with enough equity in your property to cover the amount of debt and their fees. (they have access to Land Registry)
• You have other assets that could be seized to cover the amount of debt and their fees.(they can check with your insurance company)
• Your company is still trading (they have access to companies house records).
• You have access to sufficient funds to cover the amount of the debt and their fees.
• You are in full time employment, they can apply for an attachment of earnings from your employer so they receive their money from your wages every month.
• If the stat demand follows a county court judgment, they can apply for a Third Party Debt Order and freeze your bank account until the debt is paid.

The court should grant the application if: “the debt is disputed on grounds which appear to the court to be substantial” – Insolvency Rules 1986 r.6.5(4)(b) (you only need to show the existence of a genuine dispute, not to prove that they are correct)