CORPORATE STATUTORY DEMAND

01 September 2018

• Solicitors Liverpool
• disputed debt
• corporate debtors
• statutory demand
• corporate statutory demand
• disputed statutory demand
• disputed debt liverpool
• winding up petition
• corporate insolvency
• dissolving the business
• preventing winding up proceedings

What are the necessary steps to take when an organisation is served a disputed statutory demand?

When dealing with corporate insolvency, unlike personal insolvency, there is no prescribed process when setting aside a statutory demand. Organisations should also be aware of receiving a winding-up petition which could tarnish, or even ruin even the most acclimated business, especially if it is advertised.

The winding-up process is when an organisation must sell all the assets of a business, in order to pay their debts to creditors, followed by allocating any remaining assets to partners or shareholders and then dissolving the business.

A winding-up petition is usually the creditors last resort to retain debt, therefore it is vital that the organisation with the debt ensures they do everything they can to prevent a winding-up petition.

If an organisation receives a winding-up petition, they should respond immediately with a letter to the creditor. The letter should include details on why the debt is disputed, and why the winding-up process is the wrong course of action to take.

The organisation should also consult with a solicitor to prevent advertising during the winding-up proceedings. The creditors should respond to the solicitor’s undertaking within two to three days.

If the creditor does not respond within this time frame, then the debtor should have no choice but to apply to the court for an injunction to prevent the creditor from issuing a winding-up petition. In accordance with the IR 2017 three copies of the application should be submitted to the court by on a Form 7.1A, alongside essential evidence. This should be submitted by application notice, unless there is limited time, then notice is not needed.

A witness statement should be included in the application, which should include:

• The creditor and the debtor’s relationship. E.g.: Supplier/Customer.
• The full details of the claim and debt dispute, including any counter claims and evidence to support the claims.
• The Statutory demand and the details if necessary.
• Evidence of the organisations solvency details.
• The letter disputing the winding-up petition.
• Any other relevant documents to support the application.

The application and evidence should be served to the creditor, as soon as possible after issuing, although the court may ask the organisation to produce further evidence to support the case.