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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Marlow Trading Ltd owes Kestrel Supplies a large undisputed debt that has been unpaid for months despite a formal written demand. Kestrel wants the company wound up. Which route must Kestrel use to obtain a compulsory winding up?

Kestrel must petition the court for a compulsory winding up, showing that Marlow cannot pay its debts, for instance because a formal demand for an undisputed debt went unsatisfied. Creditors cannot use members' resolutions or appoint a liquidator themselves, and striking off is a different process.

  1. APass a special resolution at a members' meeting
  2. BPresent a petition to the court, relying on the company's inability to pay its debtsCorrect
  3. CAppoint a liquidator directly by written notice
  4. DAsk the registrar to strike the company off

Explanation

Compulsory winding up is ordered by the court on a petition, and a creditor can petition by showing the company is unable to pay its debts, for example after an unsatisfied formal demand. A creditor cannot pass a members' resolution because it is not a member in that capacity. A creditor also cannot appoint a liquidator on its own authority. Striking off is a different process and does not suit a company with debts.

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