How to Respond to a Statutory Demand

There are several ways to respond to a disputed Statutory Demand. Firstly, you can reply in writing, within 18 days, by setting out in detail the grounds for the dispute. If you follow up with an invitation to withdraw the Statutory Demand, the creditor must oblige. Also, you can apply to the court to have the Statutory Demand set aside and dismissed if:

• The debt is disputed
• More than 6 years old

However, this must be done within 18 days of receiving the Statutory Demand.

A limited company may apply for injunctive relief if the creditor refuses to withdraw the Statutory Demand after they've been notified of a dispute. If the court injunction is granted, they'll probably have to pay your legal expenses. Legal expertise cost between £5,000 and £15,000, or more if the injunction is unsuccessfully resisted. The legal grounds for defending a Statutory Demand can be technical. As a result, it's crucial that you seek advice from an independent insolvency specialist. Contact I&L today for practical guidance and support.

The counterclaim is another effective strategy that can be used to challenge a Statutory Demand. You can neutralise a creditor and gain considerable leverage if your claim for direct, indirect, or consequential loss is worth more than their claimed debt. A savvy debtor who's been served with a Statutory Demand for £20,000 might tell the creditor:

"I agree that I owe you £20,000. But the goods you sold me were substandard, so I had to buy additional stock from another supplier. They charged me £25,000, which I’m claiming against you. I'm prepared to forget about the £5,000 difference and walk away. But if you continue with your claim for £20,000, I'll counterclaim and sue you for £25,000."