What If I Have a CCJ When Going Insolvent?

A County Court Judgement against your company does not disappear when the company enters insolvency. The CCJ debt is still claimed in the liquidation, but the creditor must submit a proof of debt like any other unsecured creditor and ranks equally with them.

Unless the creditor finished enforcing the judgement before the liquidation began, the CCJ gives them no better position in it. If you also have a personal CCJ from a guarantee, that follows you after the company is gone.

We see directors assume that insolvency wipes the slate clean. It does not. It changes the mechanism for dealing with the debts, but a CCJ that was registered before insolvency remains on the company’s record and, if personally guaranteed, on yours.

We explain below how CCJs interact with the insolvency process, because understanding the mechanics helps you make better decisions about whether to pay, defend, or let the debt run into the formal process.

Under section 123(1)(b) of the Insolvency Act 1986, if a creditor tries to enforce a county court judgement against the company and the enforcement is returned unpaid in whole or in part, the company is treated as unable to pay its debts. The creditor can then present a winding-up petition without first serving a statutory demand.

A director who ignores a county court claim, allows default judgement to be entered, and then assumes insolvency resolves the problem has handed the creditor the fastest available route to compulsory liquidation, bypassing the 21-day statutory demand window entirely.

Quick Answer on What Happens to a CCJ When Your Company Goes Insolvent

A CCJ does not replace the proof of debt. The creditor must still submit a proof to the liquidator, and the judgement is strong evidence for it. The liquidator can still examine the debt behind the judgement and reject or reduce the claim.

If the company enters a CVL, there is no automatic stay. But a creditor who has not finished enforcing the CCJ before the winding-up resolution cannot keep the benefit of it against the liquidator, and the liquidator can ask the court to stop further enforcement.

If the company enters compulsory liquidation, enforcement is stayed from the date of the winding-up order unless the court gives permission, and enforcement after the petition was presented can be undone. The creditor receives whatever dividend the liquidation produces for their class, typically pence in the pound for unsecured creditors.

If you personally guaranteed the debt, the CCJ against the company does not affect the creditor’s right to pursue you for the guaranteed amount. Your personal liability survives the company’s insolvency and liquidation.

CCJs Against the Company: How They Are Treated in Liquidation

In England and Wales, a CCJ is a court order confirming that the company owes a specific debt.

(Scotland and Northern Ireland have different court and insolvency rules.) In liquidation, the creditor still submits a proof of debt, and the judgement is strong evidence for it. The liquidator decides whether to admit the proof, and the judgement does not put the creditor ahead of other unsecured creditors.

The practical implication is that a debt with a CCJ behind it is much harder to dispute than one without. If you were planning to challenge the debt, the time to do that was before the judgement was entered, not after.

Once the CCJ exists, the liquidator still examines the proof of debt and can reduce or reject it if the debt behind the judgement is wrong, but the judgement makes that much harder to argue.

We see directors who ignored a county court claim, allowed a default judgement to be entered, and then hoped insolvency would make the problem disappear.

It does not. The default judgement stands, the amount is set (often at a higher figure than the original debt due to court costs and interest), and the creditor’s claim in the liquidation is harder to challenge than it would have been if the director had engaged with the claim when it arrived.

Our guide on creditor court action explains why responding to claims matters.

CCJs and Personal Guarantees: What the CCJ Follows You For

If you gave a personal guarantee for the debt that led to the CCJ, the company’s insolvency does not release you from the guarantee. The creditor can claim the CCJ debt in the company’s liquidation and separately pursue you personally for the guaranteed amount.

We see this play out regularly. In practice, this means the creditor may receive a partial dividend from the liquidation (say, 3p in the pound) and then pursue you for the remainder under the guarantee.

The guarantee is a separate obligation. Any dividend the creditor receives from the liquidation reduces the debt still owed, and the creditor can then pursue you for the balance up to the limit of your guarantee. Some guarantees change how this works. We advise every director to check the exact wording of their personal guarantees with a solicitor, because the terms vary and the details matter.

A creditor who obtains a CCJ before the company enters insolvency gains two things: the debt becomes much harder to dispute, and if enforcement of the judgement is returned unpaid, the creditor can present a winding-up petition without a statutory demand. The creditor must still submit a proof of debt if the company is liquidated.

For creditors with personal guarantees in place, a company CCJ also provides the evidentiary foundation to pursue the director personally.

This is why creditors pursue CCJ applications even when they suspect the company will ultimately liquidate. The judgement strengthens their position in every subsequent process.

If the creditor obtains a CCJ against you personally (not just the company) and you cannot pay, you face personal enforcement: bailiffs, a charging order against your property, or ultimately personal bankruptcy.

This is the path from company insolvency to personal insolvency that many directors do not anticipate. Our guide on what happens to directors covers the full range of personal consequences.

Can You Set Aside a CCJ Before Going Insolvent?

If a CCJ was entered by default (because you did not respond to the claim), you can apply to the court to set it aside under Part 13 of the Civil Procedure Rules. The court may set aside a default judgement if you have a real prospect of successfully defending the claim or there is some other good reason, and it will look at whether you applied promptly.

We find this is worth pursuing when the underlying debt is genuinely disputed; for example, if the goods were defective, the services were not delivered, or the amount claimed is wrong. It is not worth pursuing if you owe the money and simply failed to respond to the paperwork. The court will not set aside a judgement just because you ignored the claim form and now regret it.

If you are considering insolvency and have outstanding CCJs, discuss them with your insolvency practitioner before the formal process starts. In some cases, setting aside a disputed CCJ reduces the total creditor claims and improves the position for all creditors. In other cases, the cost of the application is not justified and the CCJ should simply be left to run through the liquidation.

Multiple CCJs When Going Insolvent: When the Pattern Matters

A single CCJ against the company is a debt.

Multiple CCJs suggest a pattern of non-payment that the liquidator and the Insolvency Service will note. If the company has several CCJs registered against it, particularly from different creditors over a period of months, this is evidence that the company was unable to pay its debts for an extended period, which is directly relevant to the wrongful trading assessment.

We tell directors: the CCJ register is public. The liquidator will check it. Multiple judgements entered over a period where you continued to trade is a pattern that is difficult to explain away. It suggests you knew the company could not pay its debts and continued trading anyway.

What You Should Do If You Have a CCJ and Are Going Insolvent

1. Check whether the CCJ was entered by default. If you never responded to the claim, consider whether setting it aside is worthwhile.
2. Check your personal guarantee position. If you guaranteed the debt, the CCJ creates a personal enforcement route that survives the company’s liquidation.
3. Include the CCJ in your statement of affairs. The liquidator needs to know about every judgement debt.
4. Do not try to pay off the CCJ selectively. Paying one judgement creditor ahead of others when the company is insolvent creates preference risk.
5. Speak to a licensed insolvency practitioner who can advise on how the CCJ interacts with the insolvency route you are considering.

Company Debt’s licensed insolvency practitioners deal with CCJ-complicated insolvencies regularly. A confidential conversation will clarify where you stand and what your options are.

FAQs on CCJs When Going Insolvent