A statutory demand is a formal demand for payment from a creditor.
The company has twenty one days to deal with it and if the company fails to deal with it in that time then the creditor can then apply to court for a petition for the winding up of the company.
Directors who ignore their problems will eventually be served with a statutory demand. By one or more of the company’s creditors.
Once a formal statutory demand has been served, the company has 21 days to deal with it.
- getting it paid;
- or reaching a satisfactory agreement with the creditor to pay the debt back
- or disputing the demand and getting it set aside.
If the company does not deal with the statutory demand within 21 days then the creditor can then apply to court for a petition for the winding up of the company.
A statutory demand is usually issued as a last resort after a creditor has made previous request and attempts to get payment.
If received, a statutory demand should be dealt with by directors seriously and quickly to avoid their company being forced into liquidation.