The United Kingdom’s Emergency Restrictions on Statutory Demands and other Insolvency Measures during COVID -19 Pandemic: Is there a Balance Between the Rights and Interests of Debtors and Creditors?

Abstract

In the UK, statutory demands are used to demand a debt of at least an excess £ 5,000 for individuals and £750 for companies. Statutory demands do not apply to unliquidated debts and where there are genuine disputes to the debt. Statutory demands serve as precursors to bankruptcy or liquidation petitions. Once served, failure to comply with demand will constitute grounds for bankruptcy for individuals and winding up for companies. Most debtors prefer this mode of debt collection because it does not involve the courts therefore not susceptible to backlog. The hope of the claim is for the debtor to comply with the terms of the demand before further action is unavoidable. In the event of genuine disputes, or when it is proven that the claim is defective, or the debtor has a legitimate counter-claim, to avoid liquidation or bankruptcy claim, the solution is for the debtor to secure an injunction to set aside the application. Statutory demands should not be confused for demand letters....