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quoting case law as to how the courts determine such matters, usually has the desired effect of getting the demand withdrawn.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.
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Review your organisations priorities and ask ‘can we afford a breach?’. What do I do during an incident? Who do I involve? When do I involve the ICO?
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