If a creditor has taken reasonable steps to recover the outstanding amount, they may then apply for a County Court Judgement. The court will then decide whether there is a debt to pay. If there is, the court will issue a CCJ which will set out how the debt should be repaid.
A business will typically have 14 days to respond to the CCJ by completing the necessary paperwork. If more time is needed, it is also possible to ask the court for a 14 day extension. If you fail to respond to the court, it will undoubtedly issue the CCJ. This can have a dramatic effect on your business and your position as a company director.
Can a CCJ Force Your Company to Repay its Debts?
One of the mistakes company directors often make is to fail to take into account the long term impact of a County Court Judgement. A CCJ cannot actually force the company to repay its debts. However, it may represent the start of a slippery slope which can result in the winding-up of your company.
Once a CCJ has been made this alone can be used as evidence to start winding up proceedings.
There are also a number of other aspects of a CCJ which can make it increasingly difficult to trade. The judgement will undoubtedly reflect poorly on the company’s credit rating; however, it can also detrimentally impact your personal credit score if you gave a personal guarantee to secure the credit.
This will make it difficult not only to secure future finance from banks and building societies, but trade creditors will also be increasingly reluctant to offer company credit if they become concerned about your limited company debts.
Is it Possible to get a County Court Judgement Stopped?
In certain situations, where clear evidence of a mistake can be demonstrated to the Judge, it is possible to stop or ‘set aside’ a CCJ using Form N244. However, where there is no legitimate reason and the creditor has proof of an unpaid debt, the only option is to face the debt squarely
How Long Does a County Court Judgement Last?
CCJ’s stay on official records for six years, unless you pay the full amount within one month of the court judgement, in which case it will not be recorded. Ensure you show the court your certificate of receipt, and request a ‘Certificate of Satisfaction’ from them.
Can a CCJ make directors’ personally liable for company debts?
When a company enters insolvency, the directors become legally obliged to act in the best interests of their creditors. Failure to do so can lead to the director being held personally liable for the debts due to wrongful trading.
While the CCJ alone cannot make a director personally responsible for the company’s debts, it does provide clear evidence that the company is unable to pay its debts, and is subsequently insolvent. From this point, if the director acts in their own or their company’s best interests, rather than in the interests of creditors, they may then be held personally liable for the company’s debts.
Is there a way to prevent the court from issuing a CCJ?
As in any business turnaround or corporate insolvency matter, the earlier you act, the better your chances of achieving a more favourable resolution. In some cases it is possible to prevent the court from issuing a County Court Judgement against your company.
If you dispute the amount your company owes, or dispute the existence of any debt at all, you must complete the appropriate forms within the allotted time frame and submit them to the court. It is not uncommon for a creditor to petition for a CCJ citing an inaccurate debt amount, or the wrong debt altogether.
The key is to act early. Whether you dispute the debt amount or agree to pay the amount in full, or make arrangements to pay the outstanding sum in instalments, it is possible stop the court issuing a CCJ.
Where can you find help?
If your business is at risk of being issued a County Court Judgement, the time to act is now. Expert assistance from Jameson Smith and Co. can help you find an appropriate solution without the involvement of the court. Funding or invoice financing to raise the capital you need might be the most appropriate solution in your case. Alternatively, perhaps a Company Voluntary Arrangement (CVA) is the best solution for you.
For more information, please take a look at our dedicated County Court Judgement page, or give us a call on 08000 746 757 for a confidential discussion of your circumstances with an experienced turnaround practitioner.