If a county court judgement remains unpaid, this could lead to more serious action being taken against the business. We look at the impact and what you can do.
When one your creditors is owed money that is overdue and not being paid, one of the first actions they are likely to take against your business is an application for a County Court Judgement (also known as a CCJ). A CCJ is a court order requiring your business to pay an outstanding debt. The court will require payment to be made either in full or in accordance to an agreed payment plan.
If your company is issued with a county court judgement, this will reduce its ability access new credit and may lead to further action such as a petition for winding up.
-- A CCJ has serious implications for the company --
It is sensible to avoid a CCJ being taken out against you because once in place, it will have serious implications for your credit rating. If the judgement is agreed by the court, it will be recorded on your company's credit file and advertised in the Stubbs Gazette.
If you wish to borrow in the future, the potential lender will undertake a credit check on the business. The CCJ will show up on this check and it is likely your credit application will be refused or with worse rates and substantial personal guarantees.
If a country court judgement remains unpaid, this could lead to more serious action being taken against the business.
Increasingly creditors are pursuing winding up petitions to force payment of outstanding debts. Generally such a petition will not be granted by a court unless there is evidence that previous efforts have been made to collect the outstanding debt. An unpaid CCJ will help provide this evidence.
-- Do NOT ignore a county court judgement --
When you get notified that a creditor has applied for a county court judgement against your company, you have the opportunity to either pay the outstanding debt or challenge it before the judgement is made.
If you cannot afford to pay the agreed debt, it is very important that you complete the admission documentation and make a sensible offer of staged payments. If you do so, the court will take note of the company's situation when deciding what repayment plan is reasonable.
Once the judgement is made, the business will be able to pay the debt in sensible instalments thus protecting itself from further action.
Just ignoring the application is not good. The court will generally make a judgement without the benefit of your input and often require that the outstanding debt is paid in full as a one off payment.
When this is not adhered to, your non payment of the CCJ can be used as justification for presenting a winding up petition.
Receiving a county court judgement is not an indication that that a winding up order will automatically follow. However, the outcome of receiving a judgement will be that the company's credit rating and thus ability to borrow in the future will be negatively affected.
However, it is very important that you do not ignore an application for a count court judgement or payments towards a judgement once it is issued. Non payment will often give rise to further action against the company including actions to wind it up.
What happens to the directors if a company is wound up?
Once a company is being wound up a Liquidator will be appointed. The liquidator will undertake an investigation into the conduct of the directors to see whether they have knowingly allowed the business to trade while insolvent thus making the creditor's position worse. If this is the case, a director may face being disqualified and held personally liable for the company's debts. As a Director we look at the options you have.
Company debt restructure to improve cash flow
Ensuring that enough cash is available to maintain their business must be a priority for companies. Those that do it well will survive. Those that do not are likely to fall. As such identifying problems and implement solutions which may require a radical restructuring of debt must be a priority. We discuss some of the solutions available.
Using winding up to get your debt repaid
Using winding up to get your debt repaidAs the economy begins a fragile recovery, many businesses will be suffering their own cash flow problems and will therefore pay late or not at all. One way to try and collect overdue debt is to issue a winding up petition against the company who owes you money. We look at the potential risks and costs of doing this.
