Agency won't pay

[antell]

For an overview of the procedure, see here:
www.contractoruk.com/legal_advice/002145.html

[ASB]

John,

But why is that better than a statutory demand?

[antell]

But why is that better than a statutory demand?

Service of a statutory demand is a means of establishing that a company is unable to pay its debts. If that can be established then the creditor can petition the court for the company to be wound up and its assets used to pay its creditors.

A statutory demand should only be used when there is no real dispute that the company owes the money. If it is used in a case where the company does or may genuinely dispute the debt then in any subsequent proceedings it will be likely to be held to be an abuse of the process of the court for the statutory demand to have been made.

Some creditors try to use a statutory demand as a quick means of obtaining payment of debt from a company, the idea being that the company may be sufficiently alarmed at the prospect that a winding up petition may follow the statutory demand that they pay up without further ado.

However there is a risk that if the company genuinely disputes (or says that it genuinely disputes) the debt, it may respond to the service of a statutory demand by applying for an injunction to restrain the creditor from advertising and presenting a winding-up petition and if the company can convince the court that it genuinely disputes the debt, then the creditor may be ordered to pay the costs of the application.

If this happens the creditor still has the option of making the claim in the ordinary way but even if he then wins, he will not recover the costs he has been ordered to pay in the injuction application.

[ASB]

Broadly speaking that's what I though the difference was. In the case I'm chasing I have been paid a small amount against a debt with the promise of further payments (most previous promises having been broken). I don't think there is any possible contention to the debt since they have never queried it in 6 months (indeed accepted it on one occasion).

The statutory demand is now just waiting to go in, but I'll be holding fire for a month to see if a second payment arrives before doing so.