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289: Statutory demand
or “A formal written request for a company to pay its debts”
You could also call this:

“Court can cancel a formal payment request if a company has valid reasons”

If a company gets a statutory demand, they can ask the court to set it aside. You need to do this within 10 working days of getting the demand. You also need to tell the creditor (the person who sent the demand) within those 10 days that you’re asking the court to set it aside.

The court won’t give you extra time to ask for the demand to be set aside. But, when they hear your case, they might give you more time to deal with the demand.

The court might agree to set aside the demand if:

  • There’s a big disagreement about whether the company really owes the money or if it’s due yet.
  • The company thinks they’re owed money too, and once you take that off what they’re being asked to pay, it’s less than a certain amount.
  • There are other good reasons to set it aside.

Even if there’s a small mistake in the demand, the court won’t set it aside unless not doing so would be really unfair. A mistake could be getting the amount wrong or describing the debt incorrectly.

The court can add conditions when they set aside a demand.

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Next up: 291: Additional powers of court on application to set aside statutory demand

or “Court's extra options when you challenge a demand for payment”
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Part 16 Liquidations
Company unable to pay its debts

290Court may set aside statutory demand

  1. The court may, on the application of the company, set aside a statutory demand.

  2. The application must be—

  3. made within 10 working days of the date of service of the demand; and
    1. served on the creditor within 10 working days of the date of service of the demand.

      1. No extension of time may be given for making or serving an application to have a statutory demand set aside, but, at the hearing of the application, the court may extend the time for compliance with the statutory demand.

      2. The court may grant an application to set aside a statutory demand if it is satisfied that—

      3. there is a substantial dispute whether or not the debt is owing or is due; or
        1. the company appears to have a counterclaim, set-off, or cross-demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or
          1. the demand ought to be set aside on other grounds.

            1. A demand must not be set aside by reason only of a defect or irregularity unless the court considers that substantial injustice would be caused if it were not set aside.

            2. In subsection (5), defect includes a material misstatement of the amount due to the creditor and a material misdescription of the debt referred to in the demand.

            3. An order under this section may be made subject to conditions.