Where a creditor, a person who is owed money, has attempted to collect payment without success, they may be able to serve a Statutory Demand if the following applies:
The Statutory Demand must be made on a specific form and served upon the debtor correctly.
If the debtor neither challenges the Statutory demand within 18 days, nor makes payment of the debt in 21 days after service of the Statutory Demand, a creditor can take further action against the debtor. If the debtor is a company, a winding up petition will be presented. Alternatively, if the debtor is an individual, bankruptcy proceedings against the debtor would need to be commenced.
The creditor who serves a Statutory Demand, has 4 months to apply to bankrupt or wind up the debtor. If the creditor takes action after 4 months, the Court will require an explanation as to the delay. Although serving a Statutory Demand is a first step taken by a creditor who intends to take further action, a creditor is not obliged to start proceedings. However, creditors should be mindful that serving a Statutory Demand should not be used as a method of enforcing a debt. A Statutory Demand should be served with the intention of winding up the company or commencing bankruptcy proceedings against an individual.
If you would like to discuss this further, please feel free to contact our litigation department on 01992 578 642.