Receiving a statutory demand can be alarming. It is a formal demand for payment and, if not dealt with promptly, may be used as the basis for bankruptcy proceedings against an individual or a winding-up petition against a company.
The most important point is simple: do not ignore a statutory demand.
A statutory demand usually gives the debtor 21 days to pay, secure, or otherwise resolve the debt. If an individual wants to challenge the demand, the application to set aside a statutory demand must usually be made within 18 days of service.
That does not mean every statutory demand is valid or should be paid. A demand may be challenged where the debt is genuinely disputed, the amount is wrong, there is a genuine cross-claim, the debt has already been paid, or the creditor is improperly using insolvency pressure to force payment of a contested debt.
This was recently considered by the High Court in Re Martin Dawn Plc / Martin v McLaren Construction Ltd [2025] EWHC 406 (Ch). The case is a useful reminder that the court will consider whether the debt is subject to a genuine and substantial dispute, or whether there is a genuine and serious cross-claim, such that insolvency proceedings are not the appropriate procedure.
This distinction matters. Insolvency proceedings are not intended to be used as a shortcut for resolving ordinary commercial, contractual, construction, professional services, or accounting disputes. Where there is a real dispute on substantial grounds, the court may set aside the statutory demand or restrain further insolvency steps.
However, the court will expect evidence. It is not enough simply to say that you disagree with the demand. You should immediately gather contracts, invoices, payment records, emails, statements of account and any correspondence showing that the debt was disputed before the demand was served.
You should also keep a clear record of how and when the statutory demand was received. The date of service may determine the deadline for any application or response.
In some cases, the right approach will be an urgent application to set aside the statutory demand. In others, it may be better to respond robustly in correspondence, request further information, negotiate payment terms, or resolve the matter commercially before further costs are incurred.
The wrong approach is silence. If a statutory demand is ignored, the creditor may argue that you are unable to pay your debts. That can quickly escalate into a bankruptcy petition or winding-up petition, with serious financial and reputational consequences.
At Lewis Nedas Law, our Dispute Resolution solicitors advise individuals, company directors and businesses on statutory demands, disputed debts, insolvency threats and urgent applications.
If you have received a statutory demand, contact Sebastian Roberts at our Dispute Resolution team urgently. The deadlines are short, and early advice can make a significant difference.
Litigation Department
Contact Lewis Nedas Law via our enquiries page or by telephone on 020 7387 2032