What are the impacts if a County Court Judgement has been made against your company?

What is a County Court Judgment (CCJ)?

A CCJ is a court order that can be registered against an individual or limited company for non-payment of a debt. A judgement is made if the creditor has tried all other means to collect the debt.

If a CCJ has been issued against a company because it cannot pay then it has failed one of the tests of insolvency. in that it cannot pay its debts when they are due.

The CCJ process:

1. Creditors apply to the court and issue the claim.
2. A County Court Summons is issued by the Court
3. You have 14 days to respond – either pay back the debt, request more time to pay (up to 14 days) or appeal the judgment with evidence. If you do not respond or come to an alternative arrangement with the creditor who filed the claim, then the CCJ will be issued and recorded against your company.

Can I stop the Court from issuing a CCJ against my company?

The only way you can stop the issuing of a CCJ is to go to court and challenge the debt. It might be that the amount being claimed is wrong or is in dispute.

To do this, you must provide all of the necessary documents for supporting your application.

So, if you receive a Country Court Summons you must act!

What happens if the debt can be repaid in full?

If you can pay the CCJ amount in full, within 30 days of the judgment date then you can stop the CCJ being recorded on your credit file.

Can a CCJ force my company to repay its debts?

No. It is up to the creditor to decide if they want to invest more time and money into working with the courts to get the debt repaid.

Be aware that failure to pay settle the debt required by the CCJ can result in enforcement action i.e. bailiffs on your doorstep.

If the CCJ is not paid then the creditor can do the following.

• Apply for a Charging Order (securing the debt against a property owned by the company)
• Issue a  Winding Up Petition,
• A Third-Party Debt Order or an Attachment of Earnings Order (a court order making your employer pay a portion of your earnings direct to the creditor until the debt is settled)

How does a CCJ affect the company?

If a CCJ is filed, then your businesses credit rating is affected for a period of six years. With a CCJ on your credit rating, it may be harder to obtain finance.

What about supplier terms?

A poor credit rating will make suppliers more cautious. Expect upfront payments for goods and services.

Can a CCJ be removed?

There are three ways in which you can get the CCJ removed:

1. Pay the CCJ within the month. Make sure the Court have been informed of the payment being settled. Proof of payment is required.
2. Wait for six years – when the CCJ will be removed from your credit record immediately, even if it is not paid.
3. Have the CCJ set aside i.e. respond and dispute the claim.

To summarise

Act. Talk to an Insolvency Practitioner like ourselves, to assist you with your options. We can help find a solution before the Court has to be involved. Have you heard of a Company Voluntary Arrangement?