Statutory Demands & Winding-Up Petitions

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Some debtors can pay but have decided you won't escalate. Insolvency-based recovery changes that. Unpaid, the debt becomes a threat to the debtor's business, not just an annoyance. Used correctly on undisputed debts, a statutory demand or winding-up petition is one of the strongest tools available. Used wrongly, it can backfire, so we assess every case first.

Statutory demand

A statutory demand is a formal notice requiring payment of an undisputed debt. The debtor has 21 days to pay or reach an agreement. If they don't, that can support a winding-up petition against a company or a bankruptcy application against an individual.

• Against a company: the debt must be more than £750 to support winding-up
• Against an individual: a bankruptcy application needs a debt of £5,000 or more
• Age of debt: you can't usually serve a statutory demand for a debt over six years old

Winding-up petition

Where a company owes more than £750 and can't or won't pay, a creditor can petition the court to wind it up. Once a petition is advertised, it's public. Banks commonly freeze the company's accounts, and its other creditors, lenders and customers can find out. The prospect alone can prompt payment. But a petition is a serious step, and we only recommend it where it's proportionate.

Current court costs (from GOV.UK at the time of writing): a £352 court fee plus a £2,600 petition deposit. We confirm current fees before you approve anything.

When these tools are not appropriate

• Disputed debts. If there's a genuine dispute, the court can set aside a statutory demand or stop a petition, and the creditor may have to pay costs.
• Debtors who genuinely can't pay. Winding up an insolvent company rarely returns much to an ordinary unsecured creditor.
• As a bluff. A threat you won't follow through damages your credibility.

Every instruction starts with our due diligence. Any escalation to insolvency action needs your written authorisation, with costs set out in advance.

Scotland

Scotland has its own insolvency procedure, but a company that can't pay a debt of more than £750 can also be wound up there. See Debt Recovery in Scotland.

Frequently asked questions

Does a statutory demand have to go through court? No. It's served directly on the debtor. What follows, a winding-up petition or bankruptcy application, does go to court.

What if the debtor pays after the petition is issued? Debtors sometimes pay at this stage. We'll advise on withdrawing the petition and recovering costs.

Related: Due Diligence · CCJ Enforcement · High-Value Debt Recovery · Our Services

Debtor refusing to pay a clear debt? Talk to us or call 01527 369593.