Statutory Demand

A formal written demand for payment of a debt, served on a debtor as a precursor to insolvency proceedings. For individuals, the debt must be at least £5,000 (s.267(4) IA 1986); for companies, the prescribed minimum is £750 (s.123(1)(a) IA 1986, though temporary increases have applied). If the debtor fails to pay, secure, or compound the debt within 21 days, the creditor can present a bankruptcy or winding-up petition.

In practice

A statutory demand does not require a court order: it is a prescribed form served directly on the debtor. For individuals, it must be personally served unless the court grants permission for substituted service. Companies are served at their registered office. Many debts are paid at this stage because debtors wish to avoid formal insolvency proceedings.