Statutory Demand and Winding-Up Petition Guide 2026/27
A statutory demand is one of the most serious formal debt recovery tools a creditor can use, and an unanswered one can lead directly to a winding-up petition against a company or a bankruptcy petition against an individual. This guide explains the deadlines, how to challenge a demand, and what happens if a petition is not stopped in time.
What a Statutory Demand Is
A statutory demand is a formal written demand for payment served by a creditor, setting out the debt owed and warning that non-payment can lead to insolvency proceedings. It is not itself a court order, but an unanswered statutory demand is treated by the court as evidence that the debtor is unable to pay its debts, which the creditor can then rely on to petition for winding up (a company) or bankruptcy (an individual).
How to Respond
You typically have 21 days from the date the demand is served to pay the debt in full, agree a settlement or payment arrangement with the creditor, or apply to court to have the demand set aside if you genuinely dispute it. Doing nothing within this window leaves the creditor free to move forward with a winding-up or bankruptcy petition.
Setting a Demand Aside
If you have a genuine dispute about the debt -- for example, you believe the amount is wrong, the debt has already been paid, or you have a valid counterclaim that offsets it -- you can apply to court to have the statutory demand set aside. This application needs to be made promptly, well within the 21-day window, since acting late significantly weakens your position.
What a Winding-Up Petition Means
A winding-up petition is a formal court application to have a company compulsorily liquidated. It is often filed after an unpaid statutory demand, though it can be based on other evidence of an inability to pay debts. Petitions are usually advertised in the Gazette ahead of the court hearing, and this publication alone can prompt a company's bank to freeze its accounts, causing immediate practical harm even before the petition is heard.
Stopping a Petition
Paying the debt in full, or reaching an agreed settlement with the petitioning creditor, before the court hearing will normally allow the petition to be withdrawn or dismissed. Because of the speed at which frozen accounts and reputational damage can occur, getting professional advice -- from an insolvency practitioner or solicitor -- as soon as a statutory demand or petition is received gives the best chance of resolving matters before the situation escalates further.
Frequently Asked Questions
What is a statutory demand?
A statutory demand is a formal written demand for payment of a debt, served by a creditor on an individual or a company. If the debt is not paid, secured, or successfully challenged within the statutory time limit, the creditor can use the unpaid demand as evidence of inability to pay to petition for bankruptcy (for an individual) or winding up (for a company).
How long do I have to respond to a statutory demand?
You typically have 21 days from service of the demand to pay the debt in full, come to an arrangement with the creditor, or apply to set the demand aside if you dispute it -- missing this window without acting is what allows a creditor to move on to a bankruptcy or winding-up petition.
What is a winding-up petition?
A winding-up petition is a formal application to the court to have a company compulsorily liquidated, most commonly used by a creditor after an unpaid statutory demand, though a petition can also be based on other evidence that a company is unable to pay its debts.
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Can I challenge or set aside a statutory demand?
Yes, if you genuinely dispute the debt, believe it is wrong in amount, or have a valid counterclaim or set-off, you can apply to court to have the demand set aside -- this must normally be done promptly, well within the 21-day response window, so getting advice quickly matters.
What happens if a winding-up petition is not challenged?
If a winding-up petition proceeds unchallenged to a hearing and the court is satisfied the company cannot pay its debts, it can make a winding-up order, putting the company into compulsory liquidation, with a liquidator appointed to realise assets and distribute funds to creditors.
Does a winding-up petition become public before the hearing?
Yes, a winding-up petition is typically advertised in the Gazette shortly before the hearing, which can be seen by banks and credit reference agencies -- this can trigger a bank to freeze the company's accounts even before the petition is heard, which is often more immediately damaging than the eventual hearing itself.
Can a company pay off the debt to stop a winding-up petition?
Yes, paying the debt in full (or reaching an agreed settlement with the petitioning creditor) before the hearing normally allows the petition to be withdrawn or dismissed, which is why speed matters once a petition has been issued or even threatened.
Is a statutory demand the same for individuals and companies?
The underlying idea is similar -- a formal demand used as a step towards insolvency proceedings -- but the process and consequences differ: for an individual, an unanswered demand can lead to a bankruptcy petition, while for a company, it can lead to a winding-up petition and compulsory liquidation.
Should I get advice as soon as I receive a statutory demand?
Yes -- because the response window is short and the consequences of missing it are serious, getting advice from an insolvency practitioner, solicitor, or a free debt/business advice service as soon as you receive a demand gives you the best chance of resolving, disputing, or managing the debt before deadlines pass.
Is there a minimum debt amount for a statutory demand or winding-up petition?
Yes -- for a company, the debt generally needs to be above a set statutory minimum (traditionally £750) before a creditor can rely on an unpaid statutory demand as grounds for a winding-up petition; for an individual, a separate minimum debt threshold applies for bankruptcy petitions. Always check the current threshold with an insolvency practitioner or gov.uk, as these limits can change.
Disclaimer: This guide reflects statutory demand and winding-up petition rules for England and Wales as they apply in 2026/27. This guide is for general information only and is not legal advice. Consult a qualified insolvency practitioner or solicitor and refer to gov.uk for current official guidance before relying on any treatment.
