Glossary · Collections
Statutory demand
A statutory demand is a formal demand for an undisputed debt in England and Wales. An unpaid one can lead to a winding-up petition against a company.
A statutory demand is a prescribed form demanding payment of a debt. For a company debtor, the debt must be at least £750 and the company has 21 days to pay, secure or settle it. If it doesn’t, the creditor can rely on the unpaid demand as evidence that the company can’t pay its debts and petition to wind it up.
It is a powerful tool and a blunt one. It is only for debts that are genuinely undisputed: using a statutory demand or winding-up petition to pressure a customer over a disputed invoice can be struck out, with the creditor paying the costs.
For individuals (sole traders), the bankruptcy threshold is higher: the debt must be at least £5,000 for a bankruptcy petition.
Example
A limited company owes a supplier £14,000 for work it has accepted and never disputed. After ignoring reminders and a letter before action, it receives a statutory demand and pays on day 19.