Coronavirus (Covid-19) New legislation coming to prevent bankruptcy petitions and protect debtors from paying debts for at least 90 days. Creditors must act now before it’s too late.
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If a company or individual (the debtor) owes you (the creditor) an undisputed sum, but has not paid or provided a reasonable explanation for the lack of payment; you should consider insolvency proceedings.
The 1st step in this process would be to serve them with a Statutory Demand. But you must act swiftly as your debtor may be:
- Paying other creditors instead of you
- Exposing you to suffer unnecessary loss
- Using your credit terms as an unsecured, interest-free loan
- Taking assets into a new company while leaving you and other creditors to perish with the old one
- Trading while insolvent
- On the brink of collapse.
A Statutory Demand (Stat Demand or Stat D) is a formal document requesting payment of an overdue debt within 21 days. You can serve a Statutory Demand on a company or person for any debt that is:
- Less than 6 years old
- £750 or more (for a company)
- £5,000 or more (for an individual).
Before commencing insolvency proceedings to wind up a limited company, you must 1st serve the debtor a Statutory Demand. Serving a Winding-up Petition after presenting a Statutory Demand will strengthen your case. But it isn't always necessary. We frequently recommend the issuing of a Formal Demand, which:
- Outlines the amount and circumstances of the debt
- Threatens the serving of a winding-up petition unless payment is made within 14, 7 or 5 days.
Why Should They Pay?
Failure to respond to either a Formal Demand or a Statutory Demand could result in the winding up of a limited company or bankruptcy for an individual.
You are free to serve a winding-up petition on a limited company 21 days after presenting your Statutory Demand. But only if:
- The debt remains unpaid
- No arrangement has been made to pay
- The Statutory Demand has neither been withdrawn nor set aside.
A debtor company that ignores a winding up petition may have its bank account(s) frozen.
I&L helps creditors recover outstanding debts and invoices using powerful instruments such as Formal Demands, Statutory Demands, and Winding-up Petitions when appropriate in the instance of insolvent companies. Call 020 7504 1300 now for free and confidential advice...