This leaflet answers common questions about statutory demands. 

This leaflet answers common questions about statutory demands.

1. What is a statutory demand?

A statutory demand is a special type of written request from a creditor  someone who is owed money) for payment of a debt.  

The person or company that receives the demand has 21 days to settle the debt or 18 days to ask the court to set aside (dismiss) the demand.

The creditor may present a petition to court for a bankruptcy order or winding-up order if, after 21 days, a statutory demand claiming a debt of more than £750 is not:

• paid
• secured (an agreement reached for   payment), or
• set aside.

2. What forms must I use to issue a statutory demand?

If an individual or sole trader owes you money,

the forms you need to use are:

• Form 6.1 – for a debt of a specific amount that is payable now.
  http://www.insolvency.gov.uk/forms/ew/Form6-01.doc
• Form 6.2 – for a debt of a specific amount that is payable now following a judgment or court order.
  http://www.insolvency.gov.uk/forms/ew/6-2.doc
• Form 6.3 – for a debt that is payable in the future.
  http://www.insolvency.gov.uk/forms/ew/6-3.doc

If a registered or unregistered company owes you money, the form to use is Form 4.1.

Forms for this are available on our website at the following links:

Form 6.1 http://www.insolvency.gov.uk/forms/ew/Form6-01.doc

Form 4.1 http://www.insolvency.gov.uk/forms/ew/Form4-01.doc

You can get the other forms from a legal stationer.

3. Must I always serve a statutory demand?

No. If you have previously got a court order that the money must be paid (judgment), you can ask the court to enforce it. Information on enforcement is available in the Courts Service leaflet EX321 ‘I have a judgment but the defendant hasn’t paid – What can I do?’.

You can get this leaflet from your local county court or from the Courts Service website www.hmcourts-service.gov.uk.

You can present a bankruptcy or winding-up petition without serving a statutory demand if:

• enforcement fails to get some or all of the money; and
• the debt is more than £750.

4. How should I serve the demand? 

a. If an individual owes you money:

You must do everything you can to bring the statutory demand to the attention of the person concerned and, if possible, serve it personally on them. You can employ a process server to do this for you (see paragraph 6).

If you cannot serve the demand like that because the person is keeping out of the

way to avoid service, there are some alternatives:

• You can send the statutory demand by first-class post or put it through the person’s letterbox. If you do this yourself and you go on to present a bankruptcy petition against this person, you will need to provide a statement of truth that says what steps you took to serve the statutory demand on the person. You will also have to state how you served the statutory demand and on what date you believe the debtor would have seen it.

• You may advertise the statutory demand in any way you think appropriate if:
• the money is owed under a judgment or order of any court; and
• you know, or believe, that the debtor has left their address or is keeping out of your way to avoid service; and
• you believe that you would not be able to recover the money owing to you by enforcing the court order.

See paragraph 3 above about how to enforce a judgment.

b. If a registered limited company owes you money:

The statutory demand is served if you leave it at the registered office of the company.

If anything stops you doing this, a statutory demand will be properly served if you send it by registered post to the company’s registered office and the company acknowledges it by signing the Post Office receipt.

c. If an unregistered limited company owes you money:

You may serve the statutory demand by:

• leaving it at the main place of business of the company; or
• delivering it to the company secretary or director, manager or principal officer of the company; or
• serving it in a way that the court may approve or direct.

5. How do I serve a statutory demand abroad?

A statutory demand is not a document issued by the court, so you do not need to ask the court’s permission to serve it abroad. You should serve it in the same way as you would do in this country – see paragraph 4.

When a statutory demand is served abroad, the time limit to comply with the demand is 28 days. The time limit for application to set aside the demand is 22 days. See paragraph 9 for more information on setting aside a statutory demand.

There are some restrictions on you being able to present a bankruptcy petition if a debtor who lives abroad fails to comply with a statutory demand:

• If the debtor lives in one of the member states of the European Union (apart from Denmark), you will not be able to present a bankruptcy petition against that person if they carry on business or earn their living in that EU country.
• If the person is retired or unemployed, the court will look at the place where they normally live. You have to make the person bankrupt under the law of the country where they normally work or live.
• If the debtor lives in a country that is not in the EU, or if they live in Denmark, then you will be able to present a bankruptcy petition only if they have lived or had a residence here, or carried on business here, at any time in the 3 years before the date you present the bankruptcy petition.

The only exception is if they are in England and Wales on that day.

6. Do I need proof I have served a statutory demand?

Yes, you will need proof of service if the debtor does not pay the statutory demand and you intend to carry on with debt-recovery proceedings. So it is usual to employ a process server to provide such proof (listed in Yellow Pages under ‘Detective agencies’). To start bankruptcy or winding-up proceedings (present a petition), the debt must be more than £750. A number of creditors for smaller amounts can put their claims together to reach this minimum.

If the debtor or company does not pay, secure or agree a settlement, or apply for the statutory demand to be set aside, then after 21 days from the date of serving the statutory demand, you can ask the court to make a bankruptcy order or winding-up order.

If a bankruptcy petition is based on a statutory demand, a certificate of service and statement of truth giving details of service of the statutory demand must be filed at court with the petition.

The person who authenticates the certificate of service and statement of truth must be the person who served the statutory demand, unless the debtor acknowledges service (agrees that they have been served it). If the debtor acknowledges service, then the person who should authenticate the certificate of service is the creditor or a person acting on their behalf.

7. What should I do if the statutory demand was not personally served or if the debtor has not acknowledged service?

Someone who knows what was done to serve the statutory demand should authenticate the certificate of service saying:

• how they served or tried to serve the statutory demand; and
• the date they believe the statutory demand came to the debtor’s attention.

8. What should I do if I receive, or my company receives, a statutory demand?

You should not ignore a statutory demand as it could lead to you being made  bankrupt or to your company being wound up by the court.

If you wish to avoid this, you must:

• comply with the statutory demand; or
• take action to stop the creditor presenting a bankruptcy or winding-up petition if you believe that you have good reason to do so.

Before you take any action you may wish to take legal advice.

9. Setting aside a statutory demand Someone has served me with a statutory demand. What can I do if I disagree with it?

Courts can set aside statutory demands but will only do this if there is a genuine dispute about whether the debt exists. A small mistake in the statutory demand about the amount owed will not make it invalid.

Individuals

Within 18 days of the statutory demand being served on you, or within 18 days of the date of the first advertisement (if the demand was advertised), you may apply to the court for the statutory demand to be set aside. If you live abroad, the time limit for applying to set aside the demand is 22 days.

You must apply to the court where you would present your own bankruptcy petition, using Form 6.4 http://www.insolvency.gov.uk/forms/ew/Form6-04.doc Application to Set Aside a Statutory Demand.

Form 6.5 http://www.insolvency.gov.uk/forms/ew/Form6-05.doc Witness Statement in Support of Application to Set Aside Statutory Demand.

If the creditor who has filed the bankruptcy petition is a Government  department and the statutory demand says that the petition will be presented in the High Court, you should apply to the High Court.

If the debt is subject to a judgment and the statutory demand says that the petition will be presented in the High Court, you should apply to the High Court.

If the deadline for you to apply to have the demand set aside has passed, you may apply for an extension of time to a Judge in the High Court or to a District Judge.

From the time you file the application to set aside the statutory demand, the deadline for you to comply with it stops running.

In Form 6.5  you must say:

• when the statutory demand was served; and
• why you believe it should be set aside.

You must file a copy of the statutory demand with Form 6.4 and Form 6.5.

On receiving your application, the court may:

• dismiss it, without giving notice to the creditor if it believes there is no good reason for setting aside the statutory demand; or
• grant the application to set aside the statutory demand.

If the court dismisses your application, then the deadline for you to pay or secure the debt, which was suspended, will restart. So if there were 12 days to run when it was suspended, there will be 12 days to run now.

If the application to set aside the statutory demand is not dismissed immediately, the court will fix a time for hearing the application and give 5 business days’ notice

to:

• you or your solicitor;
• the creditor; and
• whoever is named in the statutory demand as the person you should contact about the debt.

The court may grant the application to set aside the statutory demand if:

• the debtor appears to have a counterclaim, set-off or cross-demand that is the same as, or more than, the amount that is in the statutory demand; or
• the debt is disputed on grounds that the court thinks are substantial; or
• it appears that the creditor holds some security, such as a mortgage, that has not been disclosed or the court is satisfied that the value of any security is more than or the same as the amount claimed; or
• the court is satisfied on other grounds that the statutory demand should be set aside.

The court will only set aside the demand if injustice to the debtor would occur if the creditor presented a bankruptcy petition for the debtor’s non-compliance with the demand. So if the court believes there would be no injustice to the debtor, it will not set aside the demand.

The reason for which a bankruptcy petition may be presented is that the debtor has not complied with the terms of a statutory demand.

Technical or factual defects in a statutory demand will not necessarily mean that the court will set it aside.

If the court dismisses the application to set aside the statutory demand, it must make an order authorising the creditor to present a petition immediately or at a specified date.

Companies

Insolvency law does not specifically cover an application by a company to set aside a statutory demand. However, any person has the right to defend legal proceedings, so a company can apply to stop the process. 

If the company has a valid defence to the statutory demand, it can apply to the court to stop the creditor presenting a winding-up petition. Legal advice should be sought before making application to the court.

If the company succeeds in its application to stop the creditor presenting a winding–up petition, the creditor will have to pay the costs of the hearing.

10. Does a statutory demand expire?

There is no expiry period for a statutory demand. However, under the Limitation Act 1980, a debt must not be more than 6 years old or based on a default judgment more than 6 years old. This period can start to run again from any date the debtor agrees the debt exists and may be extended more than once. You may need legal advice if you think the debt is affected by this time limit.

11. More information

You can get more copies of this leaflet from The Insolvency Service website:

http://www.insolvency.gov.uk/.

For general enquiries you can also contact The Insolvency Enquiry Line on 0845 602 9848, available Monday - Friday 8.00am 5.00pm (except public holidays) or email:

Insolvency.Enquiryline@insolvency.gsi.gov.uk

February 2011