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To found a bankruptcy petition against an individual, the debt in a statutory demand must be at least £5,000. To found a winding up petition against a company, the threshold is £750. In both cases the debt must be a liquidated sum, meaning a fixed, ascertainable amount, and it should not be genuinely disputed.
The statutory demand is the formal warning shot of insolvency proceedings: a written demand that gives the debtor 21 days to pay, secure or compound the debt before a petition can be presented. The minimum amounts come from the Insolvency Act 1986: section 267 sets the bankruptcy level for individuals, raised to £5,000 in October 2015, and section 123 sets the £750 threshold at which a company is deemed unable to pay its debts.
The amount is only the first hurdle. The debt must be liquidated, a definite sum owed now rather than unquantified damages, and it must be payable either immediately or at a certain future date. Crucially, a statutory demand is not a debt collection tool for disputed sums: if the debtor has a genuine, substantial dispute or a real right of set off, the demand is liable to be set aside (for individuals) or the subsequent petition restrained (for companies), often with costs consequences for the creditor. The demand must also be in the prescribed form, correctly identifying the debt, the creditor and the debtor's rights.
An individual debtor has 18 days from service to apply to set the demand aside, and the creditor may petition after 21 days. Both clocks start with service, and if bankruptcy follows, the court will scrutinise how the demand was brought to the debtor's attention. The rules expect a creditor to do everything reasonable to effect personal service, which is why statutory demands are one of the most common instructions professional process servers receive. Tremark serves demands nationwide with a certificate of service as standard, sworn evidence available, and the attempt by attempt record that supports substituted service if the debtor proves evasive.
For debts under £5,000 against individuals, the county court money claims route remains available; a statutory demand for a smaller sum cannot lead to bankruptcy and serves little practical purpose.
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