On an application to set aside statutory demands under r.6.5(4)(a) Insolvency Rules 1986 SI 1986/1925, where a first instance judge had decided the issues to be raised in a proposed counterclaim were too insubstantial to be allowed to be pleaded, that was an important factor in deciding whether the issue was genuinely triable, but it was not determinative. If an appeal process was on foot the court had to decide whether it was a real, as opposed to a frivolous, appeal.Application by certain former Lloyds' names ('the names'), for an order setting aside statutory demands issued by the respondent ('Lloyd's') in respect of judgment debts obtained against each of the names. As some of the names raised cross-claims the court ordered the determination of a preliminary issue as to alleged fraudulent misrepresentation by Lloyd's. However before the preliminary issue trial Lloyd's served statutory demands on the names, whose applications to set aside were successful and Lloyd's subsequent appeal was dismissed, Society of Lloyd's v Garrow (2000) 1 BCLC 103. On 3 November 2000 Cresswell J decided against the names on the "threshold fraud point" and refused permission to appeal. Permission was subsequently granted by the Court of Appeal, which subsequently found that Lloyd's had made certain misrepresentations Society of Lloyd's v Jaffray (2002) EWCA Civ 1101, but held that they were not fraudulent. The court stated that there was nothing that prevented the names from making an application for permission to amend to the Commercial Court to raise negligent misrepresentation. In November 2002, Lloyd's served the statutory demands in issue in this case while a number of names applied to amend to raise claims for negligent misrepresentations based on the decision in Jaffray (supra). Cooke J found that the majority of the names should not be allowed permission to amend, however the application for permission to amend by a smaller group of names was not refused subject to filing properly particularised claims limited to a short time period. The judge refused permission to appeal and an application for permission was pending with the Court of Appeal. Beside applying to amend to plead negligent misrepresentation the names sought to set aside the statutory demands on the basis inter alia that it would be wrong to allow the demands to stand while the counterclaims, for which amendment was sought, had not been adjudicated on. The names argued inter alia that: (i) circumstances here justified the making of an order to set aside under r.6.5(4)(a) or (d) Insolvency Rules 1986 SI 1986/1925; (ii) under r.6.5(4)(a) the court had to determine whether there was a genuine triable issue on the counterclaim and although Cooke J's judgment and refusal to give permission to appeal could be taken into consideration, they were not determinative; and (iii) the court was obliged to consider whether there was a non-frivolous appeal that was being pursued seriously. If satisfied, the counterclaim raised a genuine triable issue within para.12.4 Practice Direction: Insolvency Proceedings (2000) BCC 927. Lloyd's argued inter alia that there would only be a triable issue if the Court of Appeal gave both permission to appeal and allowed the appeal in which case para.12.4 of the Practice Direction would be engaged and in the absence of such permission the names' claims were not sufficient to be pleadable or triable.HELD: (1) Rule 6.5(4) of the Rules indicated that all objections to a statutory demand, including the existence of a counterclaim and the disputing of a debt, could be raised at an early stage so as to set aside a statutory demand. Further, where indebtedness was challenged on grounds under r.6.5(4) the debtor was obliged to get on with the challenge and it was not appropriate to adjourn the challenge so it could be raised at the bankruptcy petition hearing. Therefore most challenges had to be mounted at the set aside stage, which included a challenge based on the existence of an alleged counterclaim. Those based on judgment debts had to be challenged at the petition stage. However there was nothing to suggest that the court's assessment of the seriousness of the challenge should differ from one stage to another. The question to be asked at the set aside stage was whether the debtor had raised a genuine triable issue. That a first instance judge had decided the issue to be too insubstantial to be allowed to be pleaded was an important factor in deciding whether the issue was genuinely triable, but it was not determinative. If an appeal process was on foot the court had to decide whether it was a real, as opposed to a frivolous appeal. (2) Cooke J's judgment and his decision not to give permission to appeal were not determinative of whether the names' proposed counterclaim raised a genuine triable issue. It was necessary to take into account the fact that an application for permission to appeal had been lodged and to assess whether the appeal the names wished to pursue was a real bona fide and non-frivolous one. The appeal could not be dismissed as frivolous or other than real. (3) The statutory demands would be set aside.Application allowed.