Unlawful attempt to wind up car dealer’s company thwarted

legal updates

The expression “petition” in the legal sense is where (usually) the creditor makes an application to the court.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

A statutory demand is not a document to be ignored. It is a legal method by which a person or company that cannot pay their debts ends up being petitioned for bankruptcy or liquidation. The expression “petition” in the legal sense is where (usually) the creditor makes an application to the court. Once such a petition is handed into the court, the bank accounts of the individual or business are immediately frozen pending a formal court hearing. This can essentially stop a company from trading in a heartbeat.

Before issuing a petition in court, the creditor should first give the debtor a formal statutory demand. In essence, this gives 21 days for the proven debt to be paid or else the creditor can petition the court for the individual to be declared bankrupt or the company put into liquidation. It is intended only for those who are proven to owe money, to have one last chance to pay before drastic action is taken. 

Unfortunately, the unscrupulous sometimes see this as a way to sidestep the normal court process of establishing whether a debt is owed or not and issue a statutory demand as an act of intimidation and bullying. Pay up – or be wound up.

And this was precisely the tactic being used when one of our clients (a limited company) got sent a statutory demand several weeks ago. Normally, the sending of a letter by Lawgistics, quoting case law as to how the courts determine such matters, usually has the desired effect of getting the demand withdrawn. However, not on this occasion, even though the demand was probably the worst example that I have ever seen. And the fact that it was drafted by a solicitor made it even more embarrassing! Still, the risk to our client’s entire business had to be taken seriously. Despite several attempts, the solicitor refused to withdraw the demand. Our client had to engage a barrister to draft all the documents required to be lodged at the High Court. with the aim of securing an urgent injunction to prevent the petition from being considered.

Indeed, it was just at the point when the documents were to be sent to the High Court asking for an injunction when the solicitor finally withdrew the statutory demand and thus allowed our client the peace of mind of knowing they could continue trading. Arguably the most time I have ever spent on a case in one week, but worth it.

The real message here – and what this client did extremely efficiently – was to send Lawgistics all legal/court documents immediately as they received them. Even a delay of days could have jeopardised their whole situation. So please, give us a fighting chance to help you by ensuring that no legal/court documents are allowed to gather dust on your desk by sending them to us without delay.

Profit BoxDevelop your people like your business depends on it

What most people don’t know is that talent development doesn’t have to be complicated, high risk or expensive. Once they integrate key development stages, the results can be remarkable. Empower your team. Lead your industry. We’re your strategic learning partner, driving performance by moving skills forward.

Jason WilliamsLegal AdvisorRead More by this author

Related Legal Updates

Court management service raises money for charity

Members can leave the legal worries to us and can focus on their core business of selling vehicles, running their service and repair garages, and/or MOT testing centres.

Can’t Pay? We’ll Take It Away!!

Should you receive a PCN, you must contact the DVLA with all the evidence you have so they can change the registered keeper on their database.

Help! I am being chased for interest and compensation against invoices I paid years ago

We would advise you to check your contracts with suppliers for the payment terms and what happens in the event of late payment.

I’ll see you in court, mate

Before commencing proceedings, the court will expect the parties to have exchanged sufficient information.

Insurers lose Business Interruption Insurance Appeal

Business Interruption insurance came to prominence in 2020 due to the policies which have cover for disruption caused by infectious/notifiable diseases.

Going solo! attending court

If you go it alone you will be known as a ‘litigant in person’.

The importance of retaining evidence

A Court is entitled to find “on the balance of probability”

Get in touch

Complete the form to get in touch or via our details below:

01480 455500

Vinpenta House
High Causeway

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.