ExpertEasy2 marksMultiple Choice
ACCA · Question 22 · Insolvency law
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?
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:
A.
£750
B.
£5,000
C.
£10,000
D.
£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).
Practice the full ACCA LW — Corporate and Business Law Practice Exam 2
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