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:

7 days

14 days

3 weeks (21 days)

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.

Question 21 All questions Question 23

Practice the full ACCA LW — Corporate and Business Law Practice Exam 5

60 questions · hints · full answers · grading

More questions from this exam

Q01Section A In the context of the English legal system, an AI ethics consultancy is appealing a de...Medium Q02Section A A statute regulating commercial drone flights was drafted in 2015. A new case involves...Medium Q03Section A Under the Human Rights Act 1998, what is the legal effect if a UK court finds that a p...Medium Q04Section A NovaTech Ltd offers to sell a batch of quantum processors to Q-Compute Plc. Q-Compute ...Medium Q05Section A During a severe economic downturn, a landlord agrees to accept half rent from a commer...Hard

View all 60 questions →