What are the implications of receiving a statutory demand?
Although it’s commonly known as a 21-day statutory demand, your company has only 18 days in which to appeal and have it set aside. It’s imperative, therefore, to seek professional insolvency assistance as soon as possible so that you take the right steps in this short 18-day window.
After 21 days have passed, the creditor is entitled to present a winding-up petition at court, which if upheld, leads to a winding-up order being granted by the court that enforces the closure of your company.
How to respond to a statutory demand
You may have several routes available, depending on your circumstances:
Pay in full or informally negotiate a payment plan with the creditor
Speed is of this essence in this situation, and if you can pay you should do so or make arrangements with the creditor to pay in instalments.
Dispute the statutory demand and/or debt
If the debt isn’t legitimate, the amount is incorrect, or the statutory demand wasn’t served as legally required, you can dispute it in court but the dispute must be genuine and you need to have sufficient proof to support it.
Other legitimate reasons for disputing a statutory demand include:
- You’re already repaying the debt in instalments and haven’t fallen behind with payments
- The creditor owes money to your company
- The creditor has security to the value of the debt or more
Enter a formal insolvency arrangement
If your company is officially insolvent you may be able to enter a formal procedure to prevent it from closing, such as a Company Voluntary Arrangement (CVA). To be eligible for this, you’ll need to owe multiple debts but a CVA can protect your company from liquidation as it’s legally binding on all parties.
CVAs restructure your debt repayments so that you make one affordable repayment monthly whilst continuing to trade as normal. Some of the debt could potentially be written off at the end of the arrangement.
Don’t Fall Foul of Unqualified AdviceWhat’s the first step to take if you’ve received a statutory demand?
You should obtain professional insolvency support as soon as your company is served a statutory demand. This ensures that you take the correct action given the time restraints involved.
Company Closure can offer you reliable independent advice on how to respond to a statutory demand. We have extensive experience in helping clients avoid compulsory liquidation and the subsequent potential for sanctions being taken against directors. We’ll also guide you on whether you have a case for disputing the demand.
Need to speak to someone?
With multiple offices across the UK and a vastly experienced team of business closure experts, you are never far away from the advice you need. Our Licensed insolvency practitioners provide free consultations to all directors and shareholders, and can quickly ascertain which closure method is best for your business.
We are licensed by recognised professional bodies and have helped thousands of directors over many years. Contact us today for your free company closure consultation.
Related Posts
25,000+ Company Directors Supported – Partner Led Service
At Company Closure we have a nationwide team of licensed insolvency practitioners and company closure experts here to help you understand your options. Whether your company is solvent or insolvent, there is a closure method out there to suit you.
Call our team of licensed insolvency practitioners today:
