Purpose
Where clients have unpaid invoices and other unpaid debts, what they seek is a swift and inexpensive process to enforce payment. A statutory demand can, in appropriate circumstances, offer the solution.
What is a Statutory Demand?
A statutory demand is a document which gives a company/an individual 21 days warning to pay a debt. At the end of the 21 days the statutory demand can be followed up by a winding up petition against a company or a bankruptcy petition against an individual. In many cases following the issue of a statutory demand a petition is not issued as the claim is paid or settled. Statutory demands are successful because the average debtor is concerned by the consequences after the 21 day period.
A statutory demand is the first step to winding up/bankruptcy. They are prepared and served without court involvement and can be served as soon as the debt becomes payable and there is no requirement to obtain a judgment. If the debtor disputes the claim, they can apply for the demand to be set-aside. If the statutory demand is set-aside, this can result in an order for costs being made against the creditor but usually this is avoided if the demand is agreed to be set aside before proceedings are issued.
