What is a statutory demand? And what to do if you get one!

Jun 14, 2024

Have you landed here because you’ve received a Statutory Demand and Googled what it means for your business? Don’t worry – we’ve got you.

Reading this quick guide will give you a valuable snapshot of everything you need to know, and most importantly what to do next. Which is great news, because you have just 21 days to respond!

What is a Statutory Demand?

In short – it’s a demand for prompt payment of a debt.

A statutory demand, whilst not a court-issued document, is a formal notice from a creditor that if payment of a debt is not made (or a mutually acceptable payment plan is not agreed) within 21 days, court proceedings can follow. Statutory demands can be used as evidence to the courts that a debtor is unable to repay their debts as they fall due, and therefore the creditor can present a bankruptcy or winding up petition – in other words, they can initiate insolvency proceedings.

Statutory demands are usually used when the amount owed by a company is £750 or more, or £5,000 or more for an individual. To serve the demand, the creditor must be able to prove that the debt is not disputed, or that a payment plan is not already in place.

A statutory demand can be served in several ways. It can be handed directly to an individual, left at a registered company office, or given to a company director, company secretary or manager. It’s important to note there are rules creditors must adhere to when it comes to a statutory demand and how it is served (your legal advisor can explore this with you later).

Can you challenge a statutory demand?


You can apply to the court to challenge the demand, or have it set aside within 18 days of it being served. Companies can also apply for an injunction to restrain a creditor from commencing insolvency proceedings.

If the demand is upheld, the creditor is then able to petition for bankruptcy/winding up. However, if the challenge is upheld by the court and the creditor fails to withdraw the demand for the reasonably-disputed debt, they may be forced to pay the debtor’s costs for having the demand set aside.

It’s clear from all this that you must act quickly, knowledgably and responsibly. With that in mind – here are our top tips for what to do next.


7 top tips to follow when you receive a statutory demand

  1. Deal with a statutory demand promptly! Don’t procrastinate or hope it will go away if you keep your head down. You have three weeks to respond, after which your creditor can use your non-payment as evidence that you are insolvent or bankrupt.
  2. Consider whether you can reasonably dispute the debt. If the debt is disputed on substantial grounds, then the creditor cannot use your non-payment to make you insolvent or bankrupt.
  3. Seek legal advice to understand your options. This includes understanding the evidence you need and writing to the creditor and/or applying to the court to dispute the debt or have it set aside.
  4. Consider whether you can pay the debt within the 21-day If the debt is not disputed and if you can pay it, it is advisable to do so quickly. Paying the debt will mean the creditor cannot bring insolvency proceedings.
  5. Consider offering to pay the debt in instalments, or to pay a reduced amount. Unsecured creditors will know that if they pursue insolvency proceedings, they will likely only receive a fraction of their debt. Accordingly, offering a payment plan or a settlement may be a better outcome for both parties. Again, it is advisable to seek legal advice to ensure the agreement is effective.
  6. Be realistic. The statutory demand may be symptomatic of broader problems. If you are facing financial difficulties, you should consider whether you may already be insolvent and seek legal advice.
  7. Understand your options for a turnaround plan. This can range from seeking new funding or cutting costs, to formal restructuring processes.

The key message is that a statutory demand must be taken seriously. Your response must therefore match the gravity and urgency of the situation.

This is just a brief overview. If you have a statutory demand in your hand, your best course of action is to get in touch with Leverets.

Our team have been providing legal advice and assistance in insolvency matters and CCDA proceedings, including handling statutory demands and recovery planning, for over 30 years. We apply the very highest levels of precision and expertise. Our blended team guarantees superior results, whatever the nature of the case.

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