Successfully defending a statutory demand where the undisputed element exceeded the bankruptcy threshold

Our client faced the imminent threat of a bankruptcy petition being presented against them to recover payment of a partially disputed debt, where the undisputed element exceeded the bankruptcy threshold of £5,000. The presentation of the petition alone would have had dire consequences on our client’s ability to continue to trade.  

By delivering a robust defence to the statutory demand, Ashfords successfully secured its withdrawal.

The challenge

The issue of the bankruptcy petition risked terminating our client’s trading licence, having catastrophic consequences for our client. Time was very much of the essence: our initial engagement was 36 days after service of the statutory demand, well beyond the statutory 18 day period within which our client should have challenged the demand. The creditor could have issued a bankruptcy petition any time.  Furthermore, we faced a real challenge in the preparation of our client’s defence, given the absence of readily available documentary evidence. The agreements being enforced by the creditor were oral only. 

Whilst our client disputed the creditor’s assertions as to the terms of the agreements, evidencing that was challenging, and required a detailed and rapid analysis of our client’s accounting and banking records.

Our approach

Time is of the essence when threatened with such a devastating petition. 

Ashfords had to quickly get up to speed in order to prepare a robust reply to the statutory demand. Working collaboratively with our client, we identified the evidence required to tackle the demand, and to identify valid and material counterclaims. 

Within just days of our engagement, we were in dialogue with the creditor working towards a successful outcome for our client.

The result

The creditor agreed to withdraw the statutory demand and not to issue a petition on receipt of our draft application to set aside the statutory demand. 

We resolved the dispute with the creditor by then negotiating and documenting terms of settlement.