Statutory demands are usually issued as a strong arm tactic to obtain funds from someone as the fear of an impending bankruptcy petition usually works. The courts do not encourage their use as a means of enforcing a judgement. Today the debt has to be in excess of £5000 for a petition to be issued. The demand can be made on any of the available forms as this will not effect its validity. After the demands service, by a process server, 21 days have to be allowed to give the debtor time to either pay or negotiate a settlement to the satisfaction of the creditor. A petition for bankruptcy has to be served within 4 months of service of the demand. The debtor can if good reason exists apply to the court to set aside the demand within 18 days of it service. However if the sum demanded is that which has been ordered by a court to be payed to the creditor and the debtor has applied for permission to appeal in good time or an appeal is underway then:-
Rule 10.24(2) of the Insolvency (England and Wales) Rules 2016 provides:-
‘If the petition is brought in respect of a judgment debt, or a sum ordered by any court to be paid, the court may stay or dismiss the petition on the ground that an appeal is pending from the judgment or order, or that execution of the judgment has been stayed.’
This is an important defence and may be sufficient to deter even the most litigiously well resourced creditor. However it should be noted that the mere issuance of a bankruptcy petition by the court has the effect of a notification being sent by the court to the Chief Land Registrar who will make entries to the effect on any Land Registry entries that the alleged debtor may have (i.e. property ownership) which will also effect any charges e.g. by mortgagors that are registered. Therefore a bankruptcy does not have to be granted, when full restrictions will be notified to the Chief Land Registrar, for entries to be made to the register that may subsequently need to be removed.