A creditor wishes to force a company into compulsory liquidation because the company cannot pay its debts. The creditor plans to serve a statutory demand.

What is the minimum debt threshold required to serve a statutory demand on a company?

Answer options:

£750

£5,000

£10,000

£75,000

How to approach this question

Memorize the statutory thresholds for corporate insolvency. The statutory demand limit for companies has remained historically low.

Full Answer

A.£750✓ Correct

Under section 123 of the Insolvency Act 1986, a company is deemed unable to pay its debts if a creditor to whom the company owes a sum exceeding £750 serves a written statutory demand, and the company fails to pay, secure, or compound the debt within 21 days.

Common mistakes

Confusing the corporate statutory demand threshold (£750) with the individual bankruptcy threshold (£5,000).

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Practice the full ACCA LW — Corporate and Business Law Practice Exam 2

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