What is a CCJ? Understanding County Court Judgements

November 30, 2023 / Business Insolvency

Receiving a CCJ, or County Court Judgement, is a realistic possibility for companies struggling with their finances. Creditors can apply to have one served to such a company, which can have a series of detrimental effects if approved. However, it is possible to mitigate the effects of a CCJ, and even prevent one from being served outright.

In this article, Clarke Bell will discuss what a CCJ is, how it can impact your company, and what you can do about it. We will also discuss what to do if you are unable to pay the CCJ and any other company debts.

What is a CCJ?

A County Court Judgement (CCJ) is a legal document issued by a court to a company, ordering a debt repayment. Creditors may apply for a CCJ to force a company into repaying an outstanding debt, assuming the court agrees with the claim. Should a CCJ be issued to a company, directors will receive a document detailing the particulars of the CCJ. This includes the amount owed, the creditor who applied, dates and deadlines, and your options.

If you receive a CCJ, you’ll have a few ways to respond, including:

  • making a full repayment
  • reaching a repayment agreement with your creditors
  • making a counterclaim against your creditor
  • disputing the CCJ’s legitimacy. 

We will cover these approaches in more detail later. 

It is vital that you respond to a CCJ. Ignoring it will likely result in more problems, as the courts may use more severe debt collection methods.

Will a CCJ be visible on my company’s records?

One of the downsides of a CCJ is that it will be present on your company’s records. These can be accessed via the Register of Judgements, Orders, and Fines, which is a publicly available database. This database can be viewed for a small fee by future creditors, stock providers, and potential business partners. This can jeopardise these future potential relationships and make them more difficult to secure. This can be quite an issue as a CCJ remains on a company’s records for six years.

Although a CCJ will typically be added to your company’s records, this rule has certain exceptions. The first exception is if a company pays its debt in full, as ordered, within 4 weeks. The second exception is mounting a successful dispute against a creditor. If a company can prove that the CCJ was submitted in error, or had factual inaccuracies within the claim, then the CCJ will be set aside and removed from the company’s records.

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The effects of a CCJ

Assuming a CCJ is added to a company’s records, it will have a number of noteworthy and detrimental effects on the company. Most notably, receiving a CCJ is an ultimatum; your company will either repay the debt in full, reach an agreement with creditors, or face further legal action. As such, you have lost the initiative to creditors once a CCJ is served.

In addition, having a CCJ added to your company’s records can make future negotiations difficult – e.g. attempting to take out loans. As anyone can pay to see the details of your company’s CCJs, future creditors and suchlike may impose unfavourable terms in a contract, or refuse to work with your company outright. To make matters worse, CCJs are visible for six years, meaning this could be quite a persistent problem.

Responding to a CCJ

If your company receives a legitimate CCJ, your options for handling it are limited. You can pay the debt in full. This will resolve the CCJ and get it removed from your company’s records, if done within 4 weeks. However, this is often easier said than done for companies struggling financially, as the recipients of CCJs often are.

Another option is to negotiate a new repayment agreement with your creditor. This can be done using a Company Voluntary Arrangement (CVA), a formal insolvency procedure specialising in reaching new repayment agreements. The end goal is to reach an agreement that suits both parties, and will act as a resolution to a CCJ.

If you cannot pay the debt association with the CCJ, it is crucial that you do not bury your head in the sand. An insolvency procedure called a Creditors’ Voluntary Liquidation (CVL) is often the best solution for you.

If your company receives a CCJ in error, then you may contest the CCJ in court to have it set aside. This can be accomplished by submitting clear evidence of an error, such as an incorrect loan sum, a failure to follow procedure, or outright misconduct. You would be advised to take legal advice about the best way to pursue this approach. 

It is vital that you only contest a CCJ if you have reason to believe it was made in error; mounting a frivolous dispute will not be viewed well by the court, and may result in penalties.

Consequences of ignoring a CCJ

Ignoring a CCJ is not a good idea. Although it may be tempting in times of financial difficulty, it could result in your creditors taking further action. This could include sending bailiffs to seize assets or submitting a winding-up petition. Additionally, it will be a mark against you should your creditor take you to court on accusations of director misconduct. 

If you cannot pay your CCJ, you should take professional advice from your accountant and/or an insolvency practitioner (like Clarke Bell). A popular option for dealing with debts that a company cannot pay, is to place the company into Creditors’ Voluntary Liquidation (CVL).

Clarke Bell can help you

If you have received a CCJ, and you cannot pay back the money that you owe, give us a call.

Clarke Bell have more than 29 years of experience in helping companies find the best solutions to their financial problems. We can do the same for you. 

Contact us today for free advice from our friendly team of experts.