Statutory demand

A formal written demand for payment of a debt within 21 days. If the debtor does not pay within the 21 days and either fails to apply to have it set aside (individual), or fails to apply to restrain the creditor from presenting a petition (company), the creditor can use it as grounds to present a petition to the court for a bankruptcy order ( or winding up order ( .

Non-payment of a statutory demand may be deemed evidence of the debtor's inability to pay their debts. If the sum demanded (or several sums if more than one demand) exceeds the money sum (£750 for companies: section 123(1)(a), Insolvency Act 1986 ( ) or equals or exceeds bankruptcy level (£5,000 for individuals: section 267(4), Insolvency Act 1986 ( ), the creditor is in a position to present a petition for a winding up order or a bankruptcy order should the debtor fail to pay the sum demanded.

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