Statutory Demand

A statutory demand is a formal written notice from a creditor demanding repayment of a debt.

It is not just another reminder – it’s a legal warning that gives you 21 days to either: 

• Pay the debt in full 
• Agree an alternative repayment arrangement 
• Successfully challenge the demand in court 

If you do not take action within the time limit, the creditor can apply to the court to wind up your company (or make you personally bankrupt if you are personally liable). 

For company directors, ignoring a statutory demand is one of the fastest ways to lose control of your business. 

A creditor can serve a statutory demand if: 

• You owe £750 or more (for companies) 
• The debt is undisputed 
• Payment is overdue 

Creditors use statutory demands to put pressure on directors, often as a first step towards compulsory liquidation. 

• Stops all further legal action. 
• Prevents the creditor from petitioning for winding-up. 

• Pay in instalments over an agreed period. 
• Must be realistic to avoid further action. 

• If the debt is disputed or already settled. 
• Apply to court to “set aside” the demand within 18 days. 

• Creditors cannot wind up a company for debts under this threshold.

• Company Voluntary Arrangement (CVA) – restructure debts while continuing to trade. 
• Creditors’ Voluntary Liquidation (CVL) – close the company in an orderly manner. 

• As a last resort if the business cannot be saved. 

If you believe the statutory demand is wrong, you can apply to have it set aside.

To do this: 

• Act within 18 days of being served. 
• Complete the correct court forms (e.g. IAA form). 
• Include a witness statement explaining your reasons (e.g. debt is disputed, incorrect amount, procedural errors). 
• Provide supporting evidence such as contracts, payment records, or correspondence. 

Even if you miss the deadline, you may still be able to challenge it. But, you must give the court a strong reason for the delay.

If no action is taken within 21 days, the creditor can: 

• File a winding-up petition against your company 
• Apply to make you personally bankrupt (if applicable) 
• Add significant legal costs to your debt 

Once a winding-up petition is advertised, your company’s bank accounts can be frozen immediately. 

• 18 days – to apply to set aside a statutory demand 
• 21 days – to pay, settle, or make arrangements before further legal action 

If you have received a statutory demand, every day counts.

Our licensed insolvency experts can help you: 

• Understand your legal position 
• Challenge the demand if appropriate 
• Negotiate with creditors 
• Explore restructuring or liquidation options 

📞 Call us free on 0800 088 2142

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