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STATUTORY DEMAND DEFENCE: EXPERT ASSISTANCE

Receiving a statutory demand is incredibly stressful and often overwhelming for any business owner. Acting quickly is essential, as ignoring it may result in serious legal consequences, including liquidation. If you are considering setting aside a statutory demand, or require expert advice for your statutory demand defence, Inquesta is here to help. 

This page is for directors of limited companies. If you have a personal tax debt, such as Self Assessment arrears, browse our Personal Debt services instead.

What is a Statutory Demand for Payment?

A statutory demand is a legal notice served by a dissatisfied creditor to formally request payment of outstanding debts. While it is not an official court order, it does carry significant weight in insolvency proceedings.

This first step in the statutory demand process acts as a warning sign that legal action may follow if payment is not made. If you believe the debt to be invalid, defending a statutory demand or disputing its legitimacy is crucial to protecting your business. Consequences include creditors submitting a winding-up petition to dissolve the company — making prompt action key. 

How Long is a Statutory Demand Valid For? 

A statutory demand is valid for a period of 21 days from the date it is served. During this period, the onus is on you to either pay the debt, negotiate with the creditors, or apply for setting aside the statutory demand (if you believe there is a genuine cause to dispute the debt). 

It is vital that you act within this period if you wish to avoid further escalation.

How to Respond to a Statutory Demand

You can challenge a statutory demand if certain conditions apply. This is vital in your statutory demand defence strategy. Common steps to follow when challenging a demand include: 

  1. Evaluate the Demand: Review the details contained within the demand and verify the validity of the debt under scrutiny. 
  2. Seek Professional Advice: Early consultation with an insolvency expert can help you to better understand your position and determine the best course of action. 
  3. Take Necessary Action: Regardless of whether you are settling the dispute or negotiating the demand, acting promptly within the 21-day window is vital if you want to protect your business.

Challenging a Statutory Demand

You can challenge a statutory demand if certain conditions apply. These include: 

  • Debt Validity: You have grounds to dispute the existence or amount of the debt. 
  • Procedural Errors: The demand was not served correctly or does not comply with legal requirements.
  • Counterclaims: You have a legitimate claim of your own against the creditor that would offset any debt.

It’s important to note that any applications for setting aside a statutory demand must be made within 18 days of receiving it. Navigating the statutory demand defence process is complex, and expert guidance is recommended to improve your chances of a successful statutory demand defence.

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Statutory Demand Defence Process

Are you facing a statutory demand? Working with an experienced insolvency practitioner is crucial in successfully defending a statutory demand. At Inquesta, we follow an established and strategic process designed to help you mount the strongest defence possible. Our team is on hand to handle every aspect of your statutory demand defence — from start to finish. 

This process includes:

Initial Consultation

Upon instruction, our first step is to thoroughly review and assess the statutory demand and your financial situation. We do this to identify the best possible course of action, based wholly on you and your current situation. We’ll help you to determine: 

  • Whether the debt is valid 
  • If there are any grounds to dispute the demand 

Questions we will look to answer include: 

  • Was the demand serviced correctly? 
  • Is the person or company named the actual debtor? 
  • Have any prior agreements been made regarding the debt? 

Building Your Defence

If we determine a defence is warranted, we will: 

  • Gather relevant evidence, including payment records, agreements, and correspondence. 
  • Investigate any procedural errors in the service of the statutory demand 
  • Explore counterclaims or disputes against the debt’s validity. This includes questioning whether the debt exists at all, or if the amount claimed is accurate. 

The more thorough our preparation, the stronger the case for setting aside a statutory demand can be, ensuring that every potential defence angle is explored. 

Filing a Set-Aside Application

Where appropriate, we prepare and submit an official application for setting aside the statutory demand. Our team is qualified to handle all legal documentation and ensure total compliance with court deadlines, relieving you of any unnecessary stress. 

Negotiating with Creditors

In some situations, a resolution may be able to be achieved outside of court. We can act on your behalf in order to negotiate with your creditors and secure an agreement that could benefit all parties. Negotiation can come in the shape of: 

  • A smaller amount than contained in the demand being accepted up front
  • A payment schedule can be drawn up to place some structure to the repayment
  • Increase the repayment period 

Creditors may be open to the idea of negotiation. This is because adapting expectations, or agreeing to a set payment schedule, will often lead to them receiving more money than they would if the business is liquidated.

Court Representation

If the matter escalates, our team will represent you in court to present a robust defence. We develop legal arguments that challenge the demand’s validity, procedural compliance, or the creditor’s claims, protecting your business from potential liquidation. 

At every stage, we’ll work tirelessly to achieve the best possible outcome while navigating the court system on your behalf. 

Future Planning

Beyond resolving your statutory demand defence, we’ll also provide tailored advice to strengthen your financial stability and mitigate risks. This will include exploring options like business restructuring, refinancing, and a variety of insolvency options — and solutions if they are necessary. 

Ultimately, our goal is to help you achieve the best result possible and minimise the inevitable stress that comes with dealing with a statutory demand. We also want to empower you to take back control of your company’s financial future when possible. With years of experience supporting businesses in cases of insolvency, recovery, closure, and more, we’re here to guide you every step of the way.

Why Choose Inquesta

Facing a statutory demand can be daunting for business owners, but you don’t need to handle it on your own. Our experienced team of statutory demand defence experts is on hand to offer comprehensive support throughout the process. 

We are here to assist with all aspects of your statutory demand defence. Whether it’s determining the validity and legality of the demand, preparing a robust case for setting aside the statutory demand, or negotiating with creditors, our experienced team is ready to act swiftly and decisively on your behalf. 

Inquesta understands the urgency and complexity of responding to statutory demands. Here’s why you can trust us to help: 

  • Years of expertise navigating statutory demands and business debt issues. 
  • Solutions catered to fit the unique needs of your business. 
  • Fast and efficient actions to prevent escalation.

Get In Touch

Meet the Director

We’ve assembled an expert team that has decades of experience offering directors’ statutory demand defence solutions. 

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Steven Wiseglass

Director of Insolvency

A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committee of the North West Regional Committee.

Steven specialises in advising directors of small to medium-sized businesses, and has a wealth of expertise in providing the most appropriate advice whatever the firm’s circumstances may be. He has also been instrumental in helping company directors save their business and rebuild them into successful enterprises.

FAQs

When dealing with a statutory demand it is important that you know all the facts. While time is of the essence it is important that you do not act too hastily and rush into the situation without clarity. Everything you do during the process should be backed by knowledge and facts, not emotion.

A statutory demand must be personally served. This can either be done by physically handing the written notice to the debtor, with a company director or secretary, or at the firm’s place of business. It cannot be served via email or any other indirect method.

A statutory demand is valid for up to four months, meaning that failure to comply with the demand could lead to a petition for bankruptcy within the stated period. It is possible to extend the duration of a statutory demand, if permission is granted by the court.

In a majority of cases, a debtor that is able to comply with the statutory demand and repay their creditor will have their credit score totally unaffected by the demand. However, not being able to pay will result in this failure being recorded on the debtor’s credit file.

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