Statutory Demands

Statutory demands rarely arrive out of nowhere. They usually follow months of missed payments, ignored reminders or a creditor who’s simply run out of patience. Once one lands, it changes the nature of the problem entirely. This isn’t another letter to file away for later; it’s a legal trigger with a strict deadline attached.

That deadline is 21 days, and what happens within it determines everything that follows. A statutory demand handled properly in that window can often be resolved quietly. One left unanswered can escalate directly into a winding-up petition, with far fewer options left on the table.

At BCIA Recovery & Turnaround, we help directors use those 21 days productively – establishing whether the debt is genuine, opening a direct conversation with the creditor and making sure nothing is left to chance before time runs out.

What Is a Statutory Demand?

A statutory demand is a formal written demand for payment of a debt, made under the Insolvency Act 1986. For a company, it’s typically used where the debt is £750 or more and genuinely undisputed.

Unlike a court claim, a creditor doesn’t need a court order to issue one. It’s served directly, usually to the company’s registered office, and it doesn’t go through a judge first. That’s exactly what makes it so powerful and so easy for a director to underestimate.

How Much Does It Cost to Serve a Statutory Demand?

There’s no official court fee involved, since serving a statutory demand isn’t a court process in itself. That said, it isn’t free for the creditor either. Costs typically come from process-serving fees and any solicitor’s involvement in drafting the demand correctly, which can add up to a few hundred pounds in total.

This relatively low cost is one reason statutory demands are used so frequently. For a creditor, it’s a fast, inexpensive way to apply serious pressure, without needing to commit to court proceedings straight away.

The 21-Day Deadline: Why It Matters So Much

Once a statutory demand is served, the company has 21 days to respond. If the debt isn’t paid, secured, or disputed within that window, the creditor can move straight to presenting a winding-up petition, without further warning.

This is the core danger of a statutory demand. It’s not just a request for payment. It’s the evidence a creditor needs to demonstrate the company is unable to pay its debts, which is the legal test underpinning a winding-up petition.

Received a Statutory Demand? What to Do First

If you’ve received a statutory demand, here are some tips from BCIA:

1. Don’t ignore it: The 21-day clock runs whether you respond or not.
2. Check the debt carefully: Confirm whether the amount is accurate and genuinely owed.
3. Get advice immediately: The earlier you act, the more options remain open.
4. Decide on your response: This usually means paying, negotiating, or formally disputing the debt.
5. Keep a clear record: Any correspondence with the creditor should be documented from this point on.

Directors sometimes assume a statutory demand is just an aggressive letter that can be dealt with later. It isn’t, and treating it that way is exactly how a manageable debt turns into a winding-up petition.

Disputing a Statutory Demand

Disputing a statutory demand works differently for a company than it does for an individual. Individuals have a formal court process to apply to have a demand set aside. Companies don’t have that same route.

Instead, if the debt is genuinely disputed, the correct approach is to respond to the creditor directly and clearly, setting out why the debt isn’t owed as claimed. If the creditor proceeds to present a winding-up petition anyway, the company can then apply to the court to restrain the petition, or oppose it formally at the hearing, on the grounds that the debt is genuinely disputed.

This distinction catches a lot of directors out. Assuming there’s a simple form to “set aside” the demand, the same way an individual could, can lead to wasted time at exactly the point when time matters most.

Getting Statutory Demand Legal Help Early

Getting proper statutory charge legal help as soon as a demand is received, rather than waiting to see whether the creditor follows through, gives you far more room to act. A well-prepared response can, in some cases, persuade a creditor to withdraw the demand entirely, or agree a payment plan instead of pursuing a petition.

Help with a statutory demand isn’t just about the legal wording of a response. It’s about understanding whether the debt is genuinely enforceable, whether the company has grounds to dispute it, and whether negotiation is realistically likely to succeed before the 21 days run out.

What We Do When a Statutory Demand Arrives

Once instructed, our priority is making sure the 21-day deadline doesn’t catch you off guard. That typically involves:

• Reviewing the demand and the underlying debt to check it’s valid and correctly served
• Contacting the creditor directly to explore settlement or a structured repayment plan
• Advising honestly on whether there are genuine grounds to dispute the debt
• Coordinating with solicitors where a formal legal response is needed before the deadline

The earlier we’re involved, the more of these options are realistically available.

Why Directors Come to BCIA Recovery & Turnaround

A statutory demand moves fast, and getting the response right in the first 21 days often determines everything that follows. 

Our senior advisors work from our Matlock and Manchester offices, with 50 years of combined experience handling situations exactly like this. When a demand arrives, we act quickly, reviewing the debt and negotiating directly with the creditor before the deadline closes in.

If you’ve received a statutory demand, don’t wait to see whether the creditor follows through. Get in touch with BCIA Recovery & Turnaround for a free, confidential conversation about your options before the 21 days run out.