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Company Demands

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Company Demands

Company Demands

Statutory Demand Against A Limited Company

A written demand is served by a creditor on your Company under Section 123 (1) (a) of The Insolvency Act 1986 this is known as “the statutory demand”
The reason the creditor does this is because if you do nothing about the Stat Demand they can establish that your Company has an”inability to pay debts” or “insolvent”, and then they can apply to wind up your Company.

The Insolvency Act.

Insolvency Act s123(a),which says A company is deemed unable to pay its debts: If a creditor to whom a company is indebted in a sum exceeding £750. (there is no legislation as to the actual amount it could be as little as £1.) has served a statutory demand or following a Court Judgment, on the company by:

A. Instructing a process server for “personal service of the demand” at the registered company address or trading address and completing the correct form .
B. or by way of “substituted service of the demand” by post or leaving it at the company’s registered office and completing form 6.12.

A written Demand (in the prescribed form) requiring the company to pay the sum so due and the company has three weeks (or even less if the creditor feels that you are asset stripping). If your Company receives a Statutory Demand and you do not stop the presentation of a Winding up petition your Company will have all its bank accounts frozen and your Company will be put in to liquidation.You could then face being disqualified from being a Director of other companies.

What to do about a statutory demand

If you have been served with a Statutory Demand you must contact Nigel immediately as you only have 21 days to either: Settle the outstanding sum or Apply to the High Court for an injunction to restrain presentation or advertisement of a winding up petition.

List of High Courts: London. Leeds. Liverpool. Birmingham. Manchester. Preston. Newcastle upon Tyne. Cardiff. Bristol .

Warning!!

If you do not apply for an injunction and they advertise your company in the London Gazette, then your bank will FREEZE ALL OF YOUR ACCOUNTS. Do not apply to the court for a “Set Aside” as this is wrong and the court will reject this application, it must be an injunction at a High Court.

What can we do for you?

  • We establish if you have a Substantial Defence.
  • If you have we stop the Company who sent you the demand going through with the winding up petition by applying to the High Court for an Injunction Order.
  • Our Solicitor/Barrister attends the court hearing and gets you a permanent injunction to stop the Winding up procedure.

Defending a winding up petition

If your company has already received a winding up petition because you failed to respond to the statutory demand and even if its advertised in the London Gazette. We can still help to have the petition “Rescinded” stopping the bank from freezing your accounts.

Withdrawing a Statutory Demand

You don’t withdraw a demand its not the same as a demand to an individual you need to “make an undertaking that no winding up petition would be presented”

Obtaining an injunction to prevent presentation of a winding-up petition

If the creditor still intends to present a petition then the company has the option of applying to the court for an injunction to restrain the presentation of the petition. The court will only grant the application if there is substantial and bone fide dispute, cross claim or counterclaim.

The application is made by originating application to the High Court. It will normally need to be supported by a witness statement from either a director or an employee of the company. The statement should:

  • Set out clearly and comprehensively the grounds upon which the debt is disputed.
  • Exhibit evidence in the form of correspondence between the parties and contemporaneous documents.
  • Contain a summary of the financial affairs of the company and include the latest balance sheet, profit and loss accounts and forecast.
  • Ideally the hearing of the application should be on notice. If there is insufficient time it is possible to be without notice.

Obtaining an injunction to restrain advertisement

If the petition has already been presented the company still has the option of applying to the court to restrain the advert which is to appear in the London Gazette and which will likely result in the business banking facilities being frozen.

Winding-Up-Petition

For a limited company you are not required to send a Statutory Demand prior to a Petition..so if you have received a demand you have seven days to respond. Call me ASAP

Statutory Demands