What to do if Your Business has Received a County Court Judgement (CCJ)?

A County Court Judgement or CCJ is a court order, issued by a county court, to enforce the repayment of a debt. If the CCJ remains unpaid after 30 days then the consequences can be damaging both for the business and for your position as a director. 

Applying for a CCJ is a serious step and one a creditor will only take if they have exhausted all other attempts to enforce the payment of a debt. However, if they have repeatedly asked for payment to be made and are not satisfied that it’s a debt you intend to pay, they will be left with little choice but to apply to the court for a CCJ to be issued. 

How Does a CCJ Affect a Limited Company?

That depends entirely on the action you choose to take on receiving the CCJ. There are five potential routes you could take:

  • Apply to have the CCJ set aside

If the CCJ is what is known as a ‘default judgement’, i.e. one where you failed to acknowledge the claim or put in a defence, you could apply to have the CCJ set aside, which would declare it unenforceable. To do that, you must make the application promptly and be able to show that you have a good chance of successfully defending the claim. Alternatively, there must be a good reason why you should be allowed to defend the claim, such as if the claim form was sent to the wrong address. If the CCJ is set aside then it will be removed from the register and it will not have any impact on your limited company. 

  • Appeal the CCJ

Another course of action you could choose to take is to appeal the CCJ. This can only be done if the decision to issue the CCJ was wrong i.e. you dispute the debt or the amount owed and can prove you’re not liable to pay, or there was some procedural error or other irregularity in the proceedings. An application to appeal a CCJ should be made within 21 days of the original decision. If you win the appeal then the CCJ will be removed from the register and it will have no impact on your limited company.

  • Pay the CCJ in full within 30 days

If you choose to pay the CCJ in full within 30 days of the judgement being made, the CCJ will be completely removed from the court register and there will be no impact on your limited company. You will be required to inform the court and send it proof to show the payment has been made. 

  • Pay the CCJ after more than 30 days

You might choose to pay the CCJ after more than 30 days, either in one lump sum or through a series of instalments, possibly because you don’t have the necessary cash-flow to make the payment any sooner. In that case, you will receive a ‘Certificate of Satisfaction’ that the CCJ has been paid and the CCJ will be recorded on your company credit file as ‘settled’. The CCJ will be visible on your file for the next six years. That will show future lenders that the debt has been paid but it could make them rethink lending decisions. 

  • Refuse to pay the CCJ

If you refuse to pay the CCJ, you are potentially creating a serious situation that could escalate quickly. The creditor will have a range of options open to them including enforcement action, which will typically take the form of bailiffs turning up at your door to recover the debt, plus the bailiff’s costs, or seize business assets to the value of the debt. Ultimately, an unpaid CCJ could lead to the creditor issuing a winding-up petition, which is the most serious threat your company will face. That will give you just seven days to clear the debt or risk forcible liquidation. 

Even in the unlikely event that the creditor does not pursue the debt further, you will have an unpaid CCJ on your credit record for six years, which will seriously hinder your chances of accessing competitive business funding, updating vital machinery or other key assets and getting assistance with cash-flow.   

What Happens if you Don’t Pay a CCJ After Six Years?

After six years from the date of the judgement, an unpaid CCJ will automatically be removed from your credit record. Even if you haven’t paid the CCJ, it will be too late for the creditor to take enforcement action. That means, if you already have an unpaid CCJ that’s a few years old, simply waiting for the CCJ to be removed from your record could be an option. However, the threat of enforcement will be ever present until the CCJ is removed from your record. 

If you’ve only just received a CCJ and are considering not paying it, you need to think seriously about whether you can really run your business effectively with a poor credit rating for so many years. Equally, you will also leave yourself open to enforcement action, which the creditor could choose to take at any point. Is that a risk you can afford to take?

Can you get Finance with a CCJ?

One of the first things a prospective lender will look at when you make an application for business finance is the company’s credit record. An unpaid CCJ will remain on your company’s credit record for six years and impact its credit rating significantly, which will certainly make it more difficult to secure business finance. This may also extend to your suppliers. Modern credit control applications allow suppliers to view recent CCJs and that could make them reluctant to extend credit to you. 

Although a CCJ will reflect badly on your business, it doesn’t necessarily mean you won’t be able to find funding. Many lenders will look at the whole business case, with an active CCJ being just one piece of the puzzle. Unsecured business finance with a CCJ is likely to be difficult to obtain, but secured credit could still be an option. If the business has physical assets that loans can be secured against or business-to-business invoices that can be used as security, there’s a good chance you’ll be able to find affordable finance.  

Can I be a Company Director with a Personal CCJ?

Yes. There is nothing to stop you from becoming a company director if you have a personal CCJ registered against you. As a limited company is a separate legal entity from you personally, there’s no reason why your own less than perfect credit record will directly affect your business. If you are required to give personal guarantees for credit or prospective lenders run a credit check on you personally then it may make it more difficult to secure finance. However, as long as you are not prevented from becoming a company director for any other reason then a personal CCJ should not be an issue. 

How to Issue a CCJ Against a Business 

If a debtor has made repeated requests for a payment to be made but emails, letters and phone calls have proven not to be effective, the next step might be to consider a County Court Judgement. The CCJ process starts with an online application. The form you’re required to fill in will ask for information about the creditor, the debtor and the circumstances of the claim. Once the application has been submitted, the debtor will be sent a letter from the court explaining how much they owe and asking them to complete a CCJ Claim Form, which will give the debtor their chance to give their side of the story.  

The county court will then decide whether there is a proven debt to pay before issuing the CCJ. The debtor will have 14 days to either accept the claim or dispute the debt or the amount owed. It is also possible to ask for a 14-day extension. If the debtor does not dispute the CCJ, they will have 30 days from the judgement date to make the payment in full or to arrange to pay in instalments.   

Need advice?

If your business is faced with a CCJ, the whole situation can be daunting. However, it’s essential you act quickly. At AABRS, our insolvency practitioners have a wealth of experience helping company directors find appropriate solutions to keep your business on track. Get in touch with our team today for a confidential discussion of your circumstances.