The statutory demand is the most effective instrument in commercial debt recovery and the easiest to misuse. Its force comes from its consequence: a company that neglects to pay a demand exceeding the statutory threshold may be deemed unable to pay its debts — which is a problem with its bank, its directors, its auditors and its counterparties, not merely with you.
The Demand, and the Line You Must Not Cross
A statutory demand under the Companies Act 2014 is a formal written demand requiring payment of a debt exceeding the statutory threshold. If the company neglects to pay, secure or compound within the period specified, it is deemed unable to pay its debts — a ground on which a winding-up petition may be presented. Where a debt is clear and undisputed, that is legitimate pressure and is used routinely and properly. Where the debt is genuinely disputed on substantial grounds, it is not: using winding-up machinery to collect a bona fide disputed debt is capable of being treated as an abuse of process, and the consequences for the creditor are real — 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 optional. Assess whether the debt is genuinely disputed before serving the demand, not after the company writes back raising a defence. That assessment is exactly the work described on the disputed debts page, and it is the point at which a creditor most needs advice rather than momentum.
Look Before You Spend — and What Else Might Be There
Company information is publicly available and a creditor who checks makes a materially better decision than one who does not. Filed accounts — whether filed at all, how recently, and what they show, however historic. Registered charges, which reveal what security exists and who ranks ahead of you. Judgments already registered, suggesting other creditors are ahead in the queue. Directors’ other appointments, which sometimes tell a story. None of it is conclusive; all of it is cheaper than proceedings. And where a company appears to have nothing, several questions are worth asking before writing the debt off: is there a personal guarantee from a director or shareholder — common, and frequently forgotten by everyone including the guarantor; does your terms of trade contain retention of title allowing recovery of goods still identifiable; did you take security and never register or enforce it; has the business been transferred to a new entity in circumstances that raise questions; is there an insurance policy or claim the company holds? Finally, the strategic point: a petition does not pay you. It produces a liquidation in which you rank as an unsecured creditor, usually behind secured and preferential claims. Its legitimate uses are pressure on a solvent non-payer, or the appropriate response where a company genuinely should be wound up. Company law questions run alongside the firm’s company practice.
A Company That Will Not Pay?
Send the company's correct registered name and number, the debt and its basis, and whether anything has been disputed. The first question is whether the debt is clear - because that decides which instrument is available.
Call 01 5827148