The county court judgement if ignored or not paid can be used as evidence of company insolvency in that the company cannot pay its bills. The inability to pay your bills is a key indicator of company insolvency and any company owing more than £750 can be ‘wound up’.
Clearly the director/s would not have intentionally arrived at this situation so it is critical to respond to a county court claim against the company promptly and never ignore the claim. It is not unusual for companies to get involved in a dispute over an invoice payment or the quality of goods which results in a court claim. The danger is where a frivolous claim may be made and subsequently ignored as ‘so outrageous’ but this should claim should be disputed. This dispute will stop the process and the court will have the opportunity to at least hear both sides of the dispute.
How Long Does a County Court Judgement Last?
Once a county court judgement is entered against the company the company credit rating will be affected also for at least 6 years. The company or individual will be entered on a list at the register of county court judgement’s and the list is managed here.
How do I Dispute the County Court Claim?
Upon receipt of the county court claim form you will see the name of the court and there is a box to be completed so you can outline the basis on which you contest the debt.
You will have 14 days to contest the county court debt at the same court the claim was made.
How long do I have to resolve a county court claim?
You will have 14 days to contest the debt and a further 14 days to raise the funds to pay in full if not contested.
There are three relevant sections within the county court claim and they should be the debt amount owed (Section N1) so you can agree or contest the amount owed. If you agree the amount and the debt then you will also need to complete N9a and send them off within 16 days.
N9a (Section for admission) so you can admit the debt owed make an offer of payment and N9b (Section for defence) so you can provide your defence, for example if the creditor owes you money too.
What is relevance of company insolvency?
A director in the normal course of events acts in the best interests of the company but when a company becomes insolvent the director must demonstrate they are acting in the interests of the company creditors. This change of responsibilities is a very significant one and if ignored can lead to the director being made personally liable for wrongful trading.
For example the director can be made personally liable for the increased company debts in the period when the director knew or should reasonably have known the company would end in insolvent voluntary liquidation.
The county court judgement provides clear evidence of the company inability to pay its bills when due so the ‘judgement’ provides a clear stake in the ground marking the insolvency of the limited company.
Can a county court judgement be used to close my company?
Yes. If the county court judgement is not paid or set aside then the creditor can ask the judge to enforce the judgement and as long as the debt is more than £750 the company be issued with a winding up petition.
If you have received a County Court Judgement against your limited company; otherwise known as a CCJ and you would like free advice on what to do please call us on 08000 746 757; email us at [email protected]; use the Live Support feature at the bottom of the page; or if you would like to speak with a member of the team in confidence please call Mike Smith on 07912 344 394.
Written by: Mike Smith