A statutory demand designed to achieve some connected or collateral purpose is not necessarily invalid.
The Libyan Investment Authority served a statutory demand on Mr Maud (the "LIA Statutory Demand") on 19 February 2014. Amongst other things, Mr Maud argued that the LIA Statutory Demand ought to be set aside on the basis that repayment of the debt would be in breach of international sanctions. Shortly after receiving the LIA Statutory Demand, on 5 June 2014, Aabar Block s.a.r.l served a statutory demand on Mr Maud (the "Aabar Statutory Demand"). Mr Maud argued that, amongst other things, the Aabar Statutory Demand ought to be set aside as it was designed to achieve a collateral advantage (and was therefore an abuse of court process).
- the court ordered that the LIA Statutory Demand be set aside because repayment of the debt would contravene an international sanctions regime and expose Mr Maud to criminal proceedings; and
- the court decided that the Aabar Statutory Demand was not an abuse of court process. The respondents wanted to bankrupt Mr Maud and, even if it was for the connected purpose of effecting a "loan to own" strategy, it would not prejudice the position of Mr Maud's other creditors.
The judgment provides useful guidance on when the court will set aside a statutory demand on the basis that, in its opinion, it ought to be. In particular, the case clarifies that the court will allow a creditor to pursue insolvency proceedings where it will help achieve a connected objective, so long as the relief sought will not disadvantage other creditors.