Wren Ltd owes Marlow Ltd an undisputed debt well above the statutory minimum. Marlow serves a statutory demand at Wren's registered office, and Wren neither pays nor secures or compounds the debt within three weeks. Which statement is correct?

Correct answer: D) Wren is deemed unable to pay its debts, so Marlow can petition for compulsory winding up on that ground

Explanation

Section 122(1)(f) Insolvency Act 1986 allows the court to wind up a company that is unable to pay its debts. Under s123(1)(a), a company is deemed unable to pay its debts if a creditor owed more than the prescribed minimum serves a statutory demand and the company fails to pay, secure or compound the debt to the creditor's reasonable satisfaction within three weeks. Other routes include an unsatisfied execution of judgment, or proof that the company cannot pay its debts as they fall due or that its liabilities exceed its assets. No prior judgment is required, creditors may petition, and trading losses are not a ground in themselves.