Statutory Demands: A useful Debt Recovery Tool?

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Our insolvency litigation team have specialist experience and knowledge when it comes to debt recovery and the service of statutory demands.

It is an unfortunate consequence of business that you will experience issues with non-payment, whether from an individual or company debtor. Whilst the hope is that this doesn’t happen very often, it is important to be prepared and to know what to do in order to maximise your chance of recovering the debt.

Creditor client’s wishing to avoid court proceedings often ask whether a suitable alternative would be to serve a statutory demand on the debtor, however, this is not meant to be used as a debt recovery tool.

What are Statutory Demands?

A statutory demand is a formal demand for payment of a debt that is served by a creditor on a debtor. It can be used on both company and individual debtors and is used to establish that a debtor is unable to pay its debts.

It is important that statutory demands are completed correctly. A statutory demand should contain the prescribed matters set out in the relevant parts of the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016, for example, the identity of the creditor and debtor, the amount of the debt, how it arose and the amount of interest that has accrued.

A statutory demand must be served on a debtor and the method of service will vary depending on whether the debtor is an individual or a company. Where a debtor is a company, a statutory demand is served by leaving it at the registered office of the debtor company. The statutory demand can be served by post; however, proof of posting is not sufficient there must be an admittance by the debtor company that the statutory demand has been received. Therefore, if posted, it should be sent via recorded delivery. Where a debtor is in an individual, the creditor must do “all that is reasonable” for the purposes of bringing the statutory demand to the debtor’s attention. The easiest way to do this is to personally serve the statutory demand on the debtor.

Why is a Statutory Demand Effective?

A statutory demand is an effective way of identifying whether a debtor is able to pay its debts as the consequences of ignoring a statutory demand can be severe.

Once the statutory demand has been served, a debtor has 21 days from the date of service to pay the debt in full or make an offer of settlement, for example, to pay the debt back in instalments.

A failure to act on a statutory demand could lead to winding up/bankruptcy proceedings being issued. Therefore, where a debt is not disputed and/or a debtor can afford to pay the debt, it is unlikely that a debtor will ignore a statutory demand.

Can Statutory Demands be used for all debts?

Statutory demands can only be used where the debtor is an individual, over £5,000 is owed or, in the case of sums owed by a company, over £750 is due.

It is important to note that statutory demands cannot be used in circumstances where there is a dispute over the debt.


In order to help mitigate against the economic consequences of Coronavirus, the Government introduced the Corporate Insolvency and Governance Act 2020 which states that a statutory demand served between 1 March 2020 and 30 June 2021 cannot be used as the basis of a winding-up petition presented against either a registered or unregistered company on or after 27 April 2020.

During this period, any statutory demand served by a creditor against a company debtor will be void and the creditor must find another way to demonstrate that the company cannot pay its debt.

The only exception to this is where a creditor can establish that the company’s inability to pay its debts is unrelated to COVID-19 – which is a difficult requirement to meet!

How we can help

Whilst serving a statutory demand should not be used routinely in debt recovery matters, in certain circumstances it may be appropriate.

If you would like more advice on serving a statutory demand please get in contact with our Insolvency team, lead by Fiona Stuart who is contactable at or 01603 703204.

If a statutory demand is not suitable, we also have a specialist Debt Recovery team who will be able to set out your options for pursuing the debts. In this instance please get in contact with Leah Newcombe at or on 01603 703234.


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