If a company is heavily in debt, it is important to take swift action, rather than allow the situation to spiral. Failing to take control of the situation can result in creditors moving first, which could lead to a less desirable result for you and your company. If your company’s creditors apply for a County Court Judgement (CCJ), it can put your company in a very difficult position. However, this decision is not usually taken lightly and will only be used as a last resort in most cases.
In this article, Clarke Bell will discuss County Court Judgements, how they can affect your company, and how you can deal with one if it is issued to your company.
What is a CCJ?
A CCJ is a court order issued to a company by a county court. This court order acts as a debt enforcement order, demanding the recipient repay the debt as specified on the order in full. If your company receives a CCJ, this means that you will be required to repay all creditors that signed the order in full. Failing to do so can have a significant effect on both your company and you as a director.
How can a CCJ affect your company?
A CCJ can impact your company in a number of ways, depending on the specific situation and how you decide to handle the order. Some approaches will have a relatively small impact, costing only money and time before the order is dealt with. However, other approaches can lead to much further-reaching consequences, ones that are likely best avoided. Let’s consider the various methods of handling a CCJ, and how they could affect your company.
Ignoring or failing to pay the CCJ
This is arguably the worst option you could take. Purposefully refusing to pay the CCJ and ignoring it will likely cause creditors to pursue further actions. These actions are likely to cause more issues for you and your company quite quickly. For example, creditors could petition the courts to send bailiffs to your company, who will either demand you pay in person, or seize company assets to cover the debt. Alternatively, creditors could instead submit a winding-up petition to the courts, which will likely lead to compulsory liquidation for your company.
The latter could possibly result in serious consequences for you as a director. As part of compulsory liquidation, an investigation into the directors’ conduct will be opened. If it is discovered that directors have engaged in misconduct, such as not putting the interests of creditors first if the company is insolvent, then certain penalties may be applied. These penalties could include the disqualification of your director’s license for up to 15 years, disqualification from holding management positions for up to 15 years, fines, personal responsibility for company debt, and even a prison sentence. Significant reputational damage can also be incurred for having such a procedure forced upon you.
Contest the CCJ
Rather than ignoring the CCJ, you can instead choose to contest it. This can be done in two ways: appealing the CCJ, and applying to have it set aside. If you decide to appeal your CCJ, you must first make sure that it was made in error, or has incorrect information on the document. Disputing a valid CCJ won’t do anything more than waste your time. If you notice that your CCJ has errors, such as the specified owed debt, you can appeal it in the courts within 21 days of its issuance. If you have evidence and can prove the CCJ is incorrect, you may win an appeal, and the CCJ will be retracted.
The second method of contesting a CCJ is applying to have it set aside. This is only an option when a CCJ is considered a “default judgement”, meaning you did not acknowledge the order. To have the CCJ set aside, you will need two things. First, you must have a good reason for not acknowledging the CCJ when it was first issued. Second, you must be able to point out why the CCJ is invalid. If you can do both, it will be retracted.
Also Read: How To Remove a CCJ From a Company
Pay the CCJ in full
The last method of handling a CCJ is to simply pay it in full. The effects of doing so will depend on how promptly you make your payment. If you do so within 30 days, you will have fulfilled your obligation to pay, and the CCJ will be removed from your record. You will need to submit evidence that you have made the payment to the courts, however. The CCJ will have no further effects.
If you take longer than 30 days to pay the CCJ in full, the effects will be a bit different. Once you make your final payment, you will receive a Certificate of Satisfaction. This certificate shows that you have fulfilled your obligation to pay the CCJ in full, and the debt will be considered settled. However, the CCJ will remain on your record for six years, which can be seen by other creditors should they choose to look. This could make obtaining credit in the future more of a challenge.
Leaving a CCJ unpaid for six years
While not exactly a method of handling a CCJ itself, this does bear mentioning. If you leave a CCJ unpaid for six years, which is highly unlikely, as most creditors will take further action well before this point, it will be removed from your record. Creditors linked to the CCJ will no longer be able to take enforcement action after it has been removed. Relying on this is an extreme risk in most cases, as the potential for creditors to escalate the situation remains high for the entirety of this six-year period. If you are considering leaving your CCJ to elapse, you should think carefully about how this could affect your company.
Clarke Bell can help
If your company is in a difficult financial position, let Clarke Bell be there to help. We have more than 28 years of experience in helping companies find the best solutions to their financial problems, and we can do the same for you. Don’t hesitate to contact us today for a free, no-obligation consultation and find out exactly what we can do for you.