What is a Statutory Demand?

A Statutory Demand is a formal 21-day demand for payment issued by a creditor to a debtor.

When can a Statutory Demand be issued?

You can issue a Statutory Demand if your debt is owed from a limited company or an LLP and is a liquidated sum of more than £750 or when a creditor is owed a debt from an individual, a sole trader or a partnership as long as the debt is for a liquidated sum of more than £5000 and is unsecured.

In BTI 2014 LLC v. Sequana SA & Ors [2019], the Court of Appeal upheld the High Court decision that dividends can be challenged as transactions defrauding creditors under the Insolvency Act 1986.

In BTI 2014 LLC v. Sequana SA & Others [2019], the Court of Appeal upheld the decision of the High Court that dividends can be challenged as transactions defrauding creditors under section 423 of the Insolvency Act 1986 (the '1986 Act').

The first instance decision:

If your company has gone into liquidation and you are in the process of setting up a new business, you may want to use the same or a similar company name. However, if you either act as director or are involved in the management of the new company with the same or similar name as the insolvent company, you run the risk of both civil and criminal liability if you don’t comply with the restrictions under the Insolvency Act 1986.

The Pension Protection Fund has published updated general guidance on insolvency and the assessment period. This guidance is intended to help Insolvency Practitioners (IPs) to understand what they should do if a DB scheme employer suffers an insolvency event and their role and responsibilities during an assessment period.

Key points and actions for IPs

The guidance confirms a number of key points, including:

Following our previous article, the Court of Appeal dismissed an appeal following the High Court deciding that a moratorium in relation to restructuring proceedings in Azerbaijan could not be extended in breach of the Gibbs rule, allowing two significant creditors to proceed with their claims in the English Courts.

Background

This was a conjoined appeal alongside Bresco v Lonsdale. In this case, Cannon and Primus had already participated in an adjudication, with the decision of the adjudicator favouring Primus. Primus would later enter into a Company Voluntary Arrangement.

The CVA was made on the basis that, although Primus was insolvent at the time, it would be able to satisfy its creditors if it were able to recover from Cannon and other third parties through litigation and adjudication. This was preferable to liquidation.

On Monday, in its response to the consultation on protecting DB pension schemes and strengthening the Pensions Regulator, the Government confirmed its plans to:

There has always been a tension between protecting the interests of defined benefit pension schemes and insolvency given on the one hand The Pensions Regulator (TPR) seeks to protect the interests of pension scheme members and the Pension Protection Fund and on the other, the insolvency regime seeks to protect the interests of creditors as a whole.

A year after its collapse, Carillion's insolvency continues to haunt both its supply chain and the wider UK construction industry. Many of those left unpaid had spent months chasing Carillion for payment, all the while staving off payment demands from others. Overnight, their debts became unsecured. The flow of cash from Carillion that would have paid its supply chain dried up. A cascade of consequential insolvencies was inevitable.

With the Court of Appeal’s decision in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd just a few weeks old, it is hardly surprising that people are looking again at the relationship between insolvency law and adjudication, noting that in cases of liquidation where parties have a cross claim, construction law defers to insolvency law.

This was clearly illustrated in Gregg Nowak Ltd v CSS Electrical Distributors Ltd, which came before HHJ Bailey earlier this month.