Why serve a statutory demand?

When a statutory demand is served on a Company, the Creditor will be entitled to either issue a bankruptcy petition if an individual, or present a winding up petition against a Company if the debtor does not repay the debt. A winding up petition prevents a company from continuing to trade and the outcome is therefore catastrophic for a company. Similarly for an individual the impact is significant as bankruptcy continues for at least one year. The Official Receiver then becomes the trustee in bankruptcy and has authority to manage the bankrupt estate on behalf of creditors. This can mean forcing the sale of assets or recovering monies to pay creditors some or all of the monies owed to them.