Travlaw has warned travel companies of the “shocking” rise in statutory demands from customers chasing refunds in recent days.
Statutory demands for payments are sent by creditors in advance of commencing a winding up order, and give the receiving company 21 days to pay or settle. If they don’t, it can be used as evidence the firm is insolvent.
Speaking in a Travel Weekly Webcast, Travlaw associate solicitor Krystene Bousfield urged agents not to panic on receipt of statutory demands, but said they were something they “have to take seriously”.
“Quite shockingly, we’ve seen quite a few of them over the past few weeks and months – more than I thought we would,” she said.
“You can’t just ignore it and hope it will go away. You have 21 days to either pay, come to an agreement or formally dispute or attempt to set aside that stuff demand. So it’s really important that you look at the data on it, and you address it within those timescales.”
Bousfield pointed out that statutory demands are typically sent to companies’ registered office, so urged those working from home during lockdown to have someone going into the office to check post as a matter of precaution.
Despite the rise in statutory demands, Bousfield said agents “shouldn’t need to panic too much” because customers tend to use them “for the wrong reasons”.
“Statutory demand should not be used as a debt recovery tool,” she said. “And the courts do not look favourably on anyone who will do that. So if a customer is simply sending one to use a threat, and to get you to pay, they will not succeed on that basis.”
She added that the cost of issuing winding up orders is “very expensive” and that, due to the current lockdown, courts are on hold with winding up proceedings so any issued could take time.
But Bousfield insisted it was important for any recipients of statutory demands to formally dispute it within the timescale. “We need to attempt to set it aside and have actions stopped,” she said. “So something not to panic about something really to be aware of, and to be on top of.”
