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a credible alternative?
Page 27
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The petition is based on the debtor's insolvency and is demonstrated by the debtor's failure to pay a due debt on demand. The court requires one of two things to prove insolvency: a return from a bailiff/sheriff showing that the debtor has not paid, or evidence of the debtor's failure to comply with a statutory demand in bankruptcy.
Statutory demand in bankruptcy
A statutory demand is a demand for payment on a prescribed form which asks for payment within 21 days. The demand can be served pre or post-judgment and should ideally be personally served. If the debtor fails to comply with the demand, or fails to apply to set it aside, then a bankruptcy petition can be issued.
Once the bankruptcy petition is issued, a hearing date is allocated by the court (usually six to eight weeks from the date of issue), and the petition must be personally served. If the debtor does not then settle the debt to your satisfaction by the time of
the hearing, a bankruptcy order will be made against him.
Winding-up proceedings
If your debtor is a company, then windingup proceedings are appropriate. As with bankruptcy proceedings, before a windingup petition can be issued, the court must be satisfied that the company is insolvent. The test is the same as for an individual, however it is easier to prove. A simple letter of demand that has not been satisfied will suffice.
As with bankruptcy, a petition is issued and then a hearing date given. Importantly, the petition can be issued in any Chancery Court and does not have to be local to the debtor. Once issued, the petition is served personally at the company's registered office. Again, the company has until the hearing to settle the debt in full or face being compulsorily wound up. These two procedures are complicated in practice and we would advise that you seek legal assistance before going down these routes.