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Business Debt Recovery

Posted by Andrew Stripe on November 6th 2013
(Blog, Debt Recovery)

How to Prepare a Statutory Demand – Part 2.

 

Details of the creditor

When drafting a statutory demand, care should be taken to ensure that the creditor is correctly identified. For the consequences of a statutory demand being mistakenly made by a party that was not, in fact, a creditor, see Effect of a mistake in the statutory demand.

If the creditor serving the statutory demand is entitled to the debt by way of assignment, it must provide details of the original creditor, any intermediary assignees and the date of assignments. These details are to be included in Part C of Form 6.1, Form 6.2 or Form 6.3, and Part B of Form 4.1.

Details of the debt

Personal insolvency

A statutory demand must state:

(Rule 6.1(3), IR 1986.)

The sum claimed in a statutory demand may include interest and any other charge that is accruing from time to time. Where the demand is being made for sums payable immediately (that is, using Form 6.1 or 6.2), the amount claimed must be limited to that which has accrued due at the date of the demand.

Where interest or some other charge is claimed, the demand must:

(Rule 6.1(4), IR 1986).

Corporate insolvency

The statutory demand must state the amount due and owing at the time of the demand. The amount claimed may include value added tax (VAT) and interest that has accrued before the date of the demand. However, the amount claimed should not include any interest that will accrue in the future, or any other amount for which the company will become liable in the future.

Where interest or some other charge is claimed, the demand must:

(Rule 4.5(2), IR 1986.)

More guidance on drafting a statutory demand on a company is provided in Drafting note, Compulsory liquidation: statutory demand.

Details of security

If the creditor holds any security in respect of a debt owed by an individual, the amount claimed in the statutory demand should be the full amount of the debt, less the value the creditor puts on the security (rule 6.1(5)(b), IR 1986). This applies to security over any property of the debtor, not security held over any third party’s property (Re a Debtor (No 310 of 1988) [1989] 1 WLR 452).

The demand should state the:

(Rule 6.1(5)(a), IR 1986.)

If a creditor fails to refer to security, it may not be fatal to the statutory demand (see Effect of a mistake in the statutory demand).

A bankruptcy petition may be based on a debt that is secured if either:

(Section 269(1), IA 1986.)

Signing the statutory demand

A statutory demand must be signed and dated by the creditor or someone authorised to make the demand on the creditor’s behalf (rules 6.1 and 4.4(3), IR 1986).

The rules use the word “authenticated” (Insolvency (Amendment) Rules 2010 (SI 2010/686) with effect from 6 April 2010). This terminology is intended to allow for greater use of electronic transmission of documents in the future. However, the current rules do not anticipate serving a statutory demand by electronic means of service (see How to serve a statutory demand). Therefore, a signature continues to be the usual practice.

 

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