Following service of a statutory demand, a debtor has 18 days to apply to have it set aside (this includes both companies and individuals). Using its discretion, a court may set aside an application made outside of 18 days if, for example, a petition has not yet been presented by the creditor.
Setting aside a statutory demand means that the demand is no longer valid and it cannot be used as a basis for the creditor to present a winding-up petition.
There are various reasons why a debtor might apply to set aside a statutory demand, including:
- They have a genuine dispute (as insolvency proceedings based on debts subject to a genuine dispute should not be issued)
- The statutory demand has not been issued or drafted correctly
- The debtor has a counterclaim which is of equal or more value than the demand debt, or would bring the net debt value under the threshold for insolvency
- Any other reason, which might be deemed as reasonable by the court
Included within the statutory demand are details of the appropriate court and timescales for a debtor to make the relevant application to set it aside. Once an application is made for set aside, the court will list the matter for a hearing; usually costs will be awarded to the successful party.
Even if a debtor is successful in their application for setting aside the statutory demand, that does not mean that the matter is concluded or the debt no longer owed. The creditor will, however, have to recover the balance owed via other means, such as money claim proceedings.
If you are owed over £750 by a company, or £5,000 by an individual, then contact us to discuss serving a statutory demand on your debtor.
