The Compendium

Statutory Demand

A statutory demand is an official way for a creditor to request payment of outstanding arrears. No legal assistance is required to issue such a demand. It can be made in both personal and corporate insolvency matters.

To serve such a demand the creditor should:

• give it to the individual who owes the money (trying all known addresses);
• leave it at the registered office of the company or partnership that owes money (or the main place of business, if they do not have a registered office);
• give it to the company’s director, company secretary, manager or principal officer;
• get a ‘process server’ to serve it (a solicitor can arrange this).

When the individual or company that owes money (the ‘debtor’) receives a statutory demand, they have 21 days to either:

• pay the debt; or
• reach an agreement to pay.

If they do neither of the above a petition can be raised by the creditor to place a company into Compulsory Liquidation, or to place the individual into Bankruptcy.

This is if the corporate creditor is owed more than £750, or personal creditor is owed £5,000 or more. The creditor has four months to apply to Bankrupt or wind up the debtor company.

(A ‘statutory demand’ can also be called a ‘written demand’ in practice.) [See ‘Compulsory Liquidation’, ‘Bankruptcy’ and ‘Bankrupt’.]

Statutory Redundancy Pay Redundancy is a form of dismissal from a job. It happens when employers need to reduce their workforce. If an employee is being made redundant, they might be eligible for certain things; including redundancy pay and a notice period.

An employee will normally be entitled to statutory redundancy pay if they have been working for their employer for two years or more. The redundancy pay will be: