A statutory demand under the Companies Act 2014 requires a company to pay a debt exceeding the statutory threshold. If it neglects to pay, secure or compound within the period specified, it may be deemed unable to pay its debts — which is a ground for a winding-up petition, and a serious problem with its bank, its directors and its counterparties.
Where It Is Legitimate, and Where It Is Not
Where a debt is clear and undisputed, a statutory demand and the prospect of a petition are legitimate commercial pressure, used routinely and properly, and frequently more effective than any amount of correspondence. Where the debt is genuinely disputed on substantial grounds, they are not — using winding-up machinery to collect a bona fide disputed debt is capable of being treated as an abuse of process. The consequences fall on the creditor: the petition may be restrained or dismissed, costs may follow, and there is potential exposure where a company suffers damage from a petition that should never have been presented. So the sequencing is not a matter of style. Assess whether the debt is genuinely disputed before serving the demand — not after the company writes back raising a defence, by which point the instrument has already been deployed. That assessment turns on specificity and timing, and it is the point in a commercial recovery where advice is worth most.
A Petition Does Not Pay You
This is the strategic misunderstanding worth correcting. A winding-up petition does not produce payment to you; it produces a liquidation, in which you rank alongside other unsecured creditors, typically behind secured creditors and preferential claims, and frequently for very little. So its realistic uses are two: as legitimate pressure on a solvent company that is simply not paying — where the point is that the company will pay rather than face the consequence — or as the appropriate response where a company genuinely should be wound up. It is rarely a good way of getting paid, and a creditor who petitions expecting a dividend has usually misread where they sit in the queue. Ordinary proceedings, by contrast, produce a judgment you then enforce — which works where the company has assets. Choosing between the two is a question about the company’s solvency, which is exactly why looking at the filings first matters so much. Company law questions run alongside the firm’s company practice.
For companies on the receiving end: a statutory demand is a serious document and should not be ignored, but if the debt is genuinely disputed on substantial grounds that is a real answer and there are steps available. Take advice promptly rather than waiting to see whether a petition follows.
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Richard O’Shea — Solicitor
Solicitor at Mary Molloy Solicitors, established 1981, with offices at The Ormond Building on Ormond Quay — a short walk from the Four Courts. The firm advises creditors on recovery and enforcement, and, in separate matters, advises debtors who have received demands or proceedings. It is a law firm and not a debt collection agency: fees are agreed in writing at the outset and are never calculated as a percentage or proportion of what is recovered. 01 5827148 · richardoshea@marymolloysolicitors.com · LinkedIn
General information, not legal advice. This website contains general information about Irish law on debt recovery and enforcement. It is not legal advice and does not create a solicitor—client relationship. Every debt turns on its own facts — the documents, the dates, the parties and the debtor’s circumstances — and advice on yours requires a consultation. Statutory thresholds and figures referred to on this site are subject to change and should be confirmed before any step is taken.
A law firm, not a debt collection agency. Mary Molloy Solicitors provides legal advice and representation. It does not operate as a debt collection agency and does not conduct collection campaigns. Fees are agreed in writing with the client at the outset and are never calculated as a percentage or proportion of any sum recovered. In contentious business, a solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.
No outcome is promised. Nothing on this site states or implies that any debt will be recovered, that any asset will be found, that any enforcement step will succeed, or that any claim will succeed. Recovery depends substantially on the debtor’s means, which are frequently unknown at the outset.
How payment may be demanded is regulated. Section 11 of the Consumer Credit Act 1995 makes it an offence to make a demand for payment by means calculated to cause alarm, distress or humiliation, or falsely to represent that legal proceedings have been or will be issued. Nothing on this site should be read as encouraging any such conduct. Mortgage arrears on a principal private residence are dealt with under a separate regulatory framework and are outside the scope of this site.
If you are the person being pursued. Free, confidential and independent money advice is available in Ireland from MABS, the Money Advice and Budgeting Service, and through the Abhaile scheme for people in mortgage arrears. You do not have to engage a solicitor to get help, and taking advice early generally improves the options available. This firm advises debtors in matters separate from those in which it acts for a creditor, and never both sides of the same debt — conflicts are checked before any substantive discussion.
Tax. Nothing on this website is tax advice. Questions about VAT on recovered sums, bad debt relief or the treatment of write-offs belong with your accountant or tax adviser and with Revenue’s own guidance.