ExpertEasy2 marksMultiple Choice
ACCA · Question 22 · Insolvency law
Section A
A creditor is owed £5,000 by a company. The creditor serves a statutory demand for the debt at the company's registered office. How long must the creditor wait for the debt to remain unpaid before they can use this as proof of inability to pay debts to petition for compulsory liquidation?
Section A
A creditor is owed £5,000 by a company. The creditor serves a statutory demand for the debt at the company's registered office. How long must the creditor wait for the debt to remain unpaid before they can use this as proof of inability to pay debts to petition for compulsory liquidation?
Answer options:
A.
7 days
B.
14 days
C.
3 weeks (21 days)
D.
1 month
How to approach this question
Recall the statutory timeframe for a statutory demand under the Insolvency Act 1986.
Full Answer
C.3 weeks (21 days)✓ Correct
Under s.123 of the Insolvency Act 1986, one of the ways to prove a company is unable to pay its debts (a ground for compulsory winding up) is if a creditor owed more than £750 serves a written statutory demand and the company neglects to pay, secure, or compound the debt to the creditor's reasonable satisfaction for 3 weeks.
Common mistakes
Confusing the 21-day period for a statutory demand with the 14-day notice period for general meetings.
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