Saturday, July 20, 2024

Strategies for Contesting a Statutory Demand: A Detailed Guide

A Statutory Demand, established under the Insolvency Act 1986, is a formal demand for the settlement of a debt used by creditors to enforce payment from debtors, including individuals and business entities.

Debtors who question the fairness or accuracy of a Statutory Demand they’ve received have the legal option to contest and potentially have it set aside. The process of disputing a Statutory Demand involves:

  1. Acquiring Legal Counsel: Initially, a debtor should seek advice from an experienced solicitor specialising in insolvency and debt cases. This advice is fundamental to understand the case’s specifics and to decide on an appropriate legal route.
  2. Legitimate Grounds for Contesting a Statutory Demand: It’s crucial for a debtor to know the valid reasons for challenging a Statutory Demand. Commonly accepted reasons include:
    • Questioning the legitimacy of the debt.
    • The debt being less than the statutory minimum.
    • Flaws in the statutory demand’s form or substance.
    • A counterclaim, set-off, or cross-demand by the debtor that is equal to or exceeds the debt.
  3. Key Forms Required in England and Wales:
    • Form 6.4 (Rule 6.4(1)): The debtor’s application form to challenge the statutory demand.
    • Form 6.5 (Rule 6.4(2)): This form is for presenting evidence and information in support of the challenge.
    • Form 6.6 (Rule 6.4(3)): Necessary if the debtor seeks an injunction against a creditor’s bankruptcy petition.

These forms must be filled out correctly and submitted to the court, which will then arrange a hearing to review the application. Following the correct process and presenting all necessary evidence and information are critical for a successful application.

Expert Commercial Law’s Role in Debt Recovery

At Expert Commercial Law, we host a panel of solicitors proficient in commercial law, ready to assist in cases like setting aside Statutory Demands. While we are not a solicitors’ firm ourselves, we connect clients with our panel for legal advice and efficient case assistance. Our panel also specialises in other commercial legal areas, including business energy claimsshareholder disputes and contract disputes.

Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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