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If a company or an individual owes you money, you can request repayment from them by issuing a statutory demand notice. A statutory demand is a formal written request issued in the name of the debtor instructing that the debt must be paid. An individual or business that receives a statutory demand has 21 days to:

  • settle the debt
  • secure the debt – reach an agreement for payment

Issue a Statutory Demand

According to the Insolvency Act, if a company owes you £750 or more, or an individual owes you £5,000 or more, and there is no legitimate dispute, they must pay you in full or reach an agreement within 21 days of receiving a statutory demand.

They risk being declared bankrupt if they are an individual or having a winding-up petition filed against them if they are a firm.

The consequences of issuing a statutory demand

If even after issuing a statutory demand the debt is not paid within 21 days, you can apply to wind up the company or make the individual bankrupt.

Only use a statutory demand if you are certain you are owed the money. If you serve a statutory demand and subsequently file a bankruptcy or winding-up petition, the court must halt the proceedings if the amount owed is in dispute.

A statutory demand can be set aside quite easily, and the court can order you to pay costs.

It’s important to keep in mind that submitting a statutory demand is a severe action. It should only be utilised if the connection with the debtor has completely broken down.

To launch a statutory demand, the party must be financially solvent, and the debt must be worth at least £750 (if the debtor is a company) or £5000 (if the debtor is an individual) (where the debtor is an individual). The person has 21 days from the date of the statutory demand to pay the debt.

Reasons for issuing a statutory demand

It is straightforward and inexpensive to issue a statutory demand.

A statutory demand can be served as soon as the debt is due, and no judicial ruling is required first. If it can’t be delivered in person, it can be sent by recorded mail or through a letterbox. Keep a copy of the statutory demand, as well as anything else that proves the time and date the demand was served. If your statutory demand is ignored, you may require this information. Frequently, the receiving party will reply by paying right away. They can also put-up property as collateral or agree to pay in a different way, such as in instalments. Without resorting to a winding-up petition, a statutory demand can be an effective debt collection tool in and of itself. A statutory demand is frequently used as a ‘bluff,’ and it is uncommon for it to be followed by a bankruptcy or winding-up petition.

What to do next if the payment is still not made

If the party does not pay or react within 21 days, the next step is to file a petition for bankruptcy or winding up. If the court rules in your favour, the other party must be declared bankrupt or wound up.

You should be aware that you may still not get compensated! Unfortunately, as the petitioner for bankruptcy or winding-up, you do not have priority over whatever funds are available.

A winding-up order is granted

The court will rule whether or not the corporation should be wound up roughly a month after the winding-up petition is filed. If your firm fails to pay a statutory payment demand or a County Court Judgement (CCJ), the court will almost certainly order your company to be wound up.

The Company is Liquidated

The final goal of the winding-up process is to liquidate the company of the debtor and get hold of as many assets as possible so that the revenues can be used to repay creditors and contributors. Assets may be sold on the open market or at auction, with the liquidator’s primary goal being to obtain the greatest feasible price.

What happens when Shergroup is instructed?

Following receipt of your statutory demand instruction request, the following will occur |

  • We will check what your statutory demand requirements are.
  • We double-check that the fee has been agreed upon.
  • Our online case management system has been loaded with your case.
  • The system sends you an email confirming your request.
  • Payment arrangements have been made.

Instructions received outside of business hours are dealt with the next business day.

  • The statutory demand will then be drawn up by one of the team members, and the case will be assigned to a local Certificated Enforcement Agent or Process Server.
  • These seasoned professionals are part of a national team that covers the entire country.
  • According to the norms of service, the Certificated Enforcement Agent or Investigator will endeavour to serve the demand.
  • Either payment or escalation will occur as a result of this.
  • The case management system is updated as actions are completed.
  • If it’s a payment, we’ll deduct our charge and send the remaining funds to you.
  • If it’s an escalation, we’ll talk about your next steps. Start legal action, such as declaring bankruptcy or filing a winding-up petition.

  Defended actions

If your debtor does not agree with a statutory demand they’ve been given, they can apply to challenge it and get it ‘set aside.

If your debtor challenges a claim during the process, we will handle it for you and try to keep the costs as low as possible.

 In debt compromise and mediation, the debtor challenges the debt, and hiring an impartial mediator to assist both parties in reaching a mutually beneficial agreement is another option before proceeding to court. Because these are voluntary agreements, neither party can be forced to abide by them, which could result in future legal action. We have mediators on staff who can help you with this.


When employing a debt collection arbitration, independent individuals engage with both the creditor and the debtor to find an acceptable settlement. Due to the fact that arbitration, unlike mediation, is legally binding, it may be a superior choice for recovering money owed to you. Please keep in mind that you will not be able to challenge a decision made by an arbitrator.


If you’re owed money by your debtor and you haven’t received your money even after issuing a statutory demand, you may go for compulsory liquidation. Shergroup can help you assess the situation and devise an optimal plan of action. Our extensive office network comprises High Court Enforcement Offices that enforce orders across the UK with a partner-led service from our legal company Sherwins Ltd offering immediate director advice and support.

Call our business solutions advisors for information and see how we can help you with your liquidation process.

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Last updated | 19 July 2023

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