Statutory Demand

If the debt is undisputed and is over £750, then a Statutory Demand gives the Debtor about 3 weeks to pay. If the Debtor does not do so, you can

•  make him bankrupt (if an individual) or

• issue a winding up petition (if the Debtor is a company)

Allow £550 plus VAT for taking your instructions; drafting, and instructing agents to effect  personal service of,  the statutory demand and (assuming payment) processing a full payment.  [The fees of the agents will be in addition. These will depend very much on how easy it proves for them to effect service. It is possible that the debtor might try to evade service] 

If the Debtor wants to negotiate on the timing or amount of payments, then we will charge our normal hourly rates and the ultimate cost will depend on how long you negotiate.

By way of a guide, an offer by the Debtor to pay by instalments;  our taking instructions from you;  going back to the Debtor with a counter offer;  receiving the Debtor’s acceptance; arranging settlement documentation and passing on to you post dated cheques might cost another £150 + VAT

 

Inappropriate use of statutory demand

The statutory demand procedure should only be used when a debt is clear and certain

• The ideal situation is when a cheque has been dishonoured or an invoice has been presented with no subsequent complaint as to the goods/services provided

• It is not suitable for any situation when there is any doubt as to the amount due to be paid

If you disregard this rule and issue a statutory demand anyway, the other side will be best advised to issue an application to set aside the statutory demand and seek an order for costs against you

The application will come before a judge, who will not take much persuading that there is an "arguable case".  In these circumstances, he will set aside the statutory demand and order costs against you

 

Bankruptcy

The threat of bankruptcy is quite a potent threat to someone, who has money but is just messing you around. 

Bankrupts are not allowed to be Company directors, borrow money, or have a credit card.  They will probably lose their house and will lose control over their financial affairs

The threat of bankruptcy is not much of a threat to someone, who has no money. If the Debtor is made a Bankrupt, then

• A Trustee in Bankruptcy is appointed to administer his affairs and deal with all his creditors in a prescribed way

• You rank with all the other unsecured creditors and may get paid out only so many pence in the pound

You have to draft issue and serve personally the bankruptcy petition

You might decide that it is not worth actually making the Judgment Debtor bankrupt, as opposed to threatening to do so.  Remember that all creditors share in a Bankrupt’s assets, you do not get any priority

 

Fees  

We will need  you to pay £2,500 [at 2011 prices] to cover our fees, VAT and money we have to lay out. This includes

• Some VAT for which you will get a VAT receipt if you  are VAT registered

• a deposit to the Insolvency Service which you may get back if the debtor turns out to have enough money

• court fees

• a fee for agents to effect service. This might be higher if the debtor seeks to evade service

 

A more detailed analysis will be given when you instruct us

 

winding up petition

The threat of liquidation is quite a potent threat to a company which has money and a future, but is just messing you about. 

It is not such a threat to a company which has no money and which is about to fail anyway

If the company is put into liquidation, 

• A Liquidator is appointed to administer its affairs and deal with all its creditors in a prescribed way

• You rank with all the other unsecured creditors and may get paid out only so many pence in the pound

All creditors share in a liquidated company’s assets.  You do not get any priority

It is quite likely that the Company has given an all-embracing fixed and floating charge over all its assets to the Bank

• The Bank is likely to come out with whatever monies the Company owns

• The unsecured creditors, such as yourself, will be left with nothing

Call, to set up a fixed fee meeting

• one of our Litigation Team

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• 0845 270 2511

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