The Compendium

The role of a Liquidator is to take in company assets and realise them, maximising realisations to creditors. However, if there is work in train when the Liquidator is appointed, a calculation needs to be done: how much will completing the work cost, getting the product ready to sell, against how much can they be sold for? If the cost of completion is less than the price at which they can be sold – and there must be a ready market for them, or pre-existing orders – the Liquidator should consider if the work in progress is worth completing.

[See ‘Liquidator’.]

Written Demand

A written demand (often known as a ‘statutory demand’) is an official way for a creditor to ask for 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 ‘written demand’ can also be called a ‘statutory demand’ in practice.) [See ‘Compulsory Liquidation’, ‘Bankruptcy’ and ‘Bankrupt’.]