Q&As

Is it possible to serve a statutory demand abroad and, if so, how enforceable is it?

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Published by a ½Û×ÓÊÓƵ Restructuring & Insolvency expert
Published on: 21 November 2017
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A statutory demand is a demand for payment of a debt due to a creditor by a debtor. Where a statutory demand is served on a company and the debt is neither paid, secured or compounded for within 21 days, then the company is deemed by section 123(1) of the Insolvency Act 1986 (IA 1986) to be unable to pay its debts and is therefore susceptible to that creditor presenting a winding-up petition against the company in court. The service of a statutory demand is not, however, the only ‘gateway’ allowing a creditor to present a winding-up petition against the company.

For further reading, see Practice Note: What is a statutory demand?

A statutory demand is not a document issued by the court,

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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