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RECOVERING ARREARS: SERVING A STATUTORY DEMAND
This is an indirect method of recovery, as a statutory demand
can be used by a creditor as the first step towards petitioning
for the bankruptcy or winding-up (as the case may be) of the
debtor.
In order to serve a statutory demand, the following conditions
must be satisfied:
| - the debtor must owe at least £750; |
| - the arrears must be a liquidated amount; and |
| - the debt must be undisputed. |
A creditor should also consider whether the debtor has any
potential counter-claim against it, which could allow the
statutory demand to be set aside.
If the debtor does not pay the arrears within 21 days of
service of the statutory demand, the creditor can present
a bankruptcy or winding-up petition. A landlord will only
rank as an unsecured creditor in any bankruptcy or liquidation.
So, before issuing any petition, a landlord needs to consider
whether the debtor has sufficient assets to make him worth
pursuing.
Advantages:
+ Can be served relatively quickly.
+ May put significant pressure on debtor.
Disadvantages:
- Costs of presenting petition may be fairly substantial but
may not be recovered.
- Landlord only ranks as unsecured creditor in bankruptcy/liquidation.
- May be insufficient assets in bankruptcy/liquidation to
settle landlord's claim for loss as a result of any disclaimer
of the lease.
For further information or advice please contact propertylitigation@charlesrussell.co.uk
These notes represent only an outline summary
of relevant principles and detailed advice should always be
sought in particular cases.
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