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FDR Law Legal Clinic - Statutory Demands

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Q: I am a Property developer working as a Sole Trader. I’ve been served with a Statutory Demand from a supplier I am in dispute with.  What is a Statutory Demand and what do I need to do?

A: Your supplier is demanding that unless you pay the debt allegedly owing to them or provide security for it, they will to present a bankruptcy petition to a court alleging that your incapable of paying your debts.

You can apply to the court to set aside the Statutory Demand, for example if;

  • the debt is disputed on grounds that appear to be substantial
  • you have a counterclaim
  • your creditor holds some security for the debt

This may sound straightforward but unfortunately it’s not.  It is recommended that you seek specialist legal advice to guide you how the court is likely to apply the criteria to the particular circumstances of your case, and how to prepare your case. 

It is important to act quickly as there is only a small window of opportunity to submit an application to set aside the Statutory Demand.  If you do nothing, the supplier can petition to the court for your bankruptcy. 

The consequences of being made bankrupt as a Sole Trader can be devastating.  You will lose control of your business and personal finances and you could be in danger of losing your home and any other property assets.  Long term repercussions mean that you may be unable to obtain credit even after you have been discharged from bankruptcy.

For advice on Statutory Demands, please contact Howard Porter in our Warrington office on 01925 230000 or by email