Running a company on the brink of insolvency is a stressful and difficult task, to say the least. It requires walking a financial tightrope, carefully balancing a company’s income and outgoings. It is a task that can be made even more difficult if the attention of the company’s directors is split in too many directions. Additional costs and fees can slip in unnoticed, leading to problems down the line.
One such problem is a County Court Judgement (CCJ). This is an official document demanding the repayment of monies owed by a company. The order will give a timeframe in which the repayments must be made, with significant consequences awaiting directors who miss the deadline.
In this article, Clarke Bell will discuss County Court Judgements, detailing what they are, how they work, and what you can do if you can’t afford to pay them.
What is a County Court Judgement?
A CCJ is an official document that creditors can file against their debtors to receive the money they are owed. As the name suggests, it will go to the County Court, which will decide whether there is an outstanding debt that remains unpaid. If the County Court decides that a company has not fulfilled its obligations to repay creditors, a CCJ can be issued.
A CCJ order will have all the necessary details, including the names of the creditors that filed for a CCJ, the outstanding debt you owe, the date it must be paid, and the payment methods. For some CCJs, the full amount will be demanded immediately, whereas others will accept payment in monthly instalments.
What happens if I don’t pay a CCJ?
If you don’t pay your CCJ by the date specified in the order, you open yourself up to certain consequences. None of these consequences have legal repercussions; failing to pay a CCJ is not a criminal offence and therefore you will not face legal action, but your creditors can quickly pursue other avenues.
Once a CCJ is issued, your creditors have more options to recover their debt. While creditors can act as soon as the CCJ has been issued to you, most will afford you some time to begin repayment. Failing to do so will almost certainly spark further action on their part.
If you don’t pay your CCJ, your creditors may apply for an Attachment of Earnings. If approved, this will result in a portion of your earnings, in the form of a salary or otherwise, being taken in order to repay your creditors. Your creditors can also bring in bailiffs or High Court Enforcement Officers (HCEO). Both the bailiffs and HCEOs will attempt to seize company assets equivalent to the value of your debt, as a means to collect repayment. This can include stock, vehicles, equipment, and machinery, amongst other things. Bailiffs and HCEOs can pay multiple visits to your company until they have collected enough assets to fully repay your debt, assuming you haven’t taken steps to negotiate repayment terms with your creditors.
What if I can’t pay a CCJ?
If you can’t afford to pay your CCJ, do not bury your head in the sand. It’s important to take action swiftly, otherwise you leave yourself vulnerable to the aforementioned consequences of leaving a CCJ unpaid.
Your first course of action should be to contact the creditors named in the CCJ and discuss your situation. You should attempt to negotiate a repayment plan, and if you are partway through your CCJ repayment, you can instead negotiate new terms. If repayment simply isn’t an option for you, it may be best to discuss the use of a Creditors’ Voluntary Liquidation (CVL) or a Company Voluntary Arrangement (CVA). Both of these insolvency procedures can be used to help your situation, while upholding your obligations to your creditors.
Also Read: How Does a CCJ Affect a Company
Using insolvency procedures to help your situation
Dealing with a CCJ while your company is in financial distress is never easy, but help is available. If you can’t afford to make repayments, you can enlist the aid of an insolvency practitioner and consider using an insolvency procedure to address your problems. These procedures include:
Creditors’ Voluntary Liquidation
One of the most used and most effective methods of alleviating a company’s financial hardship is a Creditors’ Voluntary Liquidation. This formal insolvency procedure can provide you with a range of significant advantages, while efficiently dealing with your company’s debt.
If you intend to pursue this course of action, you will benefit from a licensed insolvency practitioner of your choosing. They will help you execute the CVL procedure, ensuring it is carried out efficiently and within the boundaries of the law. Your insolvency practitioner will be responsible for the liquidation of your company, realising assets, emptying accounts, and ultimately winding up your company. Moreover, your insolvency practitioner will liaise with your company’s outstanding creditors, keeping them up-to-date with the procedure as it unfolds.
In addition to the aid of a licensed insolvency practitioner, a CVL affords you other benefits, with two being of particular note. Firstly, your company will enjoy legal protections once the CVL procedure begins. Your creditors will no longer be able to take action against your company, keeping you safe from compulsory liquidation. Secondly, if your company still has outstanding debt after all assets have been liquidated, it will be written off. This will allow you to pursue other ventures unfettered by past debts.
Company Voluntary Arrangement
If you would prefer to keep your company in operation, you can instead pursue a Company Voluntary Arrangement (CVA). This can be a good option for companies that have a strong and viable business model, but have, for a variety of reasons, encountered financial difficulties.
With the assistance of a licensed insolvency practitioner, you can negotiate an affordable repayment plan that works in the interests of both your company and its creditors. If successful, your CVA will result in an affordable repayment plan that can be paid in monthly instalments over the course of up to five years.
Let Clarke Bell help you
If your company is facing financial hardship, from a CCJ or otherwise, don’t go it alone; let Clarke Bell help you.
We have more than 28 years of experience in helping companies solve their financial problems as efficiently as possible, using methods tailored to individual situations.
Our fees are affordable, and we provide expert advice that is both friendly and professional.
Contact us today for a free, no-obligation consultation and find out exactly what we can do for you.