What Does it Mean if a Limited Company Receives a County Court Judgment?

A County Court Judgment (CCJ) is issued when your company fails to respond to a creditor’s claim for unpaid debts. It legally enforces payment and allows the creditor to take further enforcement action if the debt remains unpaid.

CCJs can have serious consequences for a business, including:

  • It will be on your credit report for six years.
  • Customers and suppliers may be wary of doing business with you.
  • If you still don’t pay the debt, the court could take action, such as seizing assets or freezing your bank accounts.
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If your feel your company debt is pushing you towards insolvency, please reach out to us for a consultation about your situation.

NB: We are insolvency practitioners not lawyers, so we can’t help with contesting or removing CCJ’s.

County Court Judgements

How do I Know if our Company has a CCJ?

If your company has a CCJ, you will receive a formal notice from the County Court informing you that a claim has been made against you for a debt.

You can also search the Register of Judgments, Orders and Fines, which is a publicly searchable database that contains records of CCJs issued against companies and individuals. You can search by company name or number for a fee.

Checking your credit report is a third option. Any CCJs issued against your company will appear on reports from major credit reference agencies like Experian, Equifax and TransUnion.

“Can a CCJ Force My Limited Company to Repay its Debts?”

Yes, a County Court Judgment (CCJ) is a legally binding order compelling your company to repay what it owes by a specified date. If you don’t comply with the terms, you’re paving the way for further action to be taken.

In short, a CCJ eliminates any option for your company to simply ignore or avoid repaying what you owe. The creditor now has court-enforced powers to actively pursue your company’s assets and revenue streams to recover what is owed.

Perhaps most seriously, if the CCJ debt remains unsatisfied, creditors can petition the court to wind up and forcibly liquidate your limited company.

How Long Does a County Court Judgement Last?

A County Court Judgment (CCJ) remains on your credit report for six years unless you pay the full amount owed within one month of the judgment being issued. If you pay the full amount within this timeframe, the CCJ will not be recorded on your credit report.

To ensure the removal of a CCJ from your credit report following full payment, it is crucial to provide the court with proof of payment, such as a certificate of receipt. Additionally, requesting a “Certificate of Satisfaction” from the court will formally document the settlement of the debt and further support its removal from your credit history.

Can a CCJ make Directors Personally Liable ?

Directors are not automatically held personally liable for company debts following a County Court Judgement (CCJ). However, a CCJ indicating the company’s inability to settle its debts may signal insolvency. In such a scenario, directors are legally required to prioritise the interests of their creditors.

Should a director prioritise personal or company interests over those of the creditors post-insolvency, this could result in personal liability for the company’s debts due to wrongful trading. Essentially, while a CCJ alone does not transfer debt liability to directors, their actions following a declaration of insolvency, as evidenced by the CCJ, are crucial in determining personal liability.

Is There a way to Prevent the Court from Issuing a CCJ Against my Company?

Yes, there are steps you can take to try to prevent the court from issuing a County Court Judgment (CCJ).

Firstly, it’s paramount to respond within the specified timeframe (usually 14-28 days). Ignoring the claim will likely result in a default CCJ being issued against you.

If you have grounds to dispute part or all of the debt claimed, you could also file a defence outlining your reasons, but you’ll need legal council for this course of action. This will prevent a CCJ until the matter is heard in court.

If a default CCJ has already been issued due to non-response, you can apply to the court to have it set aside if you have a legitimate reason (e.g. the claim was not received).

How Can a CCJ be Enforced if We Can’t Pay?

If you don’t or can’t pay what the CCJ outlines, creditors have various options to enforce the payment. These include:

  1. Bailiffs: Bailiffs may be sent to your home or business to seize assets and sell them to recover the debt.
  2. Attachment of Earnings Order: Creditors can obtain a court order requiring your employer to deduct a portion of your wages directly to pay the debt.
  3. Third-Party Debt Order: This order compels your bank to freeze and pay funds from your account to the creditor.
  4. Charging Order: A creditor can secure the debt against a property you own, potentially leading to its sale if the debt remains unpaid.
  5. Winding-Up Petition: For company debts, a CCJ can lead to a winding-up petition, forcing the company’s liquidation if the debt is not settled within seven days.

What Should you do if your Business Receives a CCJ?

Firstly, don’t ignore or avoid the CCJ. Burying your head in the sand will only make the situation worse and give the creditor more powers to enforce the debt through aggressive means like asset seizure.

Our advice is to carefully review the CCJ paperwork and calculate the total amount owed, including interest and costs. Then, determine if you have grounds to get the judgment set aside, for example, if the claim was not properly served.

If the debt is legitimate, consider your company’s current cash flow position. Can you realistically pay the debt amount in full right away? If so, settle it immediately to limit further interest and prevent enforcement action.

If you genuinely can'[t pay, it’s worth attempting to negotiate affordable repayment terms with the creditor before the CCJ leads to enforcement. Propose a structured instalment plan you can stick to.

Finally, if the creditor refuses to negotiate, you may need to consider more formal insolvency procedures like a Company Voluntary Arrangement (CVA) to repay debts over an extended period under legal protection.

Does a CCJ Against a Company Affect the Director?

A County Court Judgment (CCJ) can indirectly impact directors in several ways:

  1. Reputation: A CCJ against the company might affect its reputation, potentially impacting the directors’ professional standing.
  2. Future Financing: Directors may face challenges when seeking finance for the company, as lenders might view a CCJ as a sign of financial instability.
  3. Personal Guarantees: If a director has provided personal guarantees for company debts, a CCJ against the company could lead to personal financial implications for them.

It’s important for directors to manage company finances responsibly to avoid such situations.

Expert Advice When you Need It

If your limited company is facing the possibility of a County Court Judgement (CCJ), immediate action and expert guidance are essential.

Company Debt offers specialised help for debt challenges via practical, jargon-free advice. We can help explore various options like funding or invoice financing to generate necessary capital or consider a Company Voluntary Arrangement (CVA) if it suits your situation better.