We’ve previously written about how County Court Judgements (CCJs) being awarded against businesses show a subsequent high correlation against the company eventually becoming insolvent.
Research from The Registry Trust, showed that there had been a 1,126% increase in companies receiving a CCJ and then going into administration or liquidation afterwards within the past two years.
The research showed that for 487 insolvent companies that had received a CCJ within a six year window that the average time between receiving a judgement and becoming insolvent was only seven months.
Of these, 35% became insolvent after only receiving one judgement against them.
We now have the final annual statistics for corporate CCJs for 2023 and can see how they have increased consecutively over the past three years.
| Year | Corporate CCJs | % Change |
| 2021 | 90,696 | — |
| 2022 | 121,992 | 135% |
| 2023 | 126,618 | 104% |
Statistics courtesy of The Registry Trust
In the last quarter (Q4 2023) alone in England and Wales there were 26,356 CCJs against businesses for an average debt of £4,478.
In Scotland there were 620 Decrees (equivalent of a CCJ) for an average of £1,575 and in Northern Ireland there were 370 for an average debt of £2,107.
What are the risks of receiving a CCJ?
Every business that has a CCJ found against it is at a higher risk of an insolvency event than other companies but for sole traders the risks for their business and personal finances are greater still.
Limited companies enjoy legal protections when it comes to business debts but sole traders do not have the same advantage. If they receive a CCJ for example, then they would be expected to settle any outstanding debts from their own personal accounts and assets.
A CCJ is not like a winding up petition which has standing to force businesses to repay debt. It legally empowers bailiffs and High Court Enforcement Officers (HCEOs) rights to visit business premises, usually the home of a sole trader, and seize company assets up to the value of any outstanding arrears.
CCJs are also publicly available to be viewed on the Register of Judgements, Orders and Fines so it can be discovered by any supplier, customer or creditor.
They also make future borrowing more expensive and difficult as they are registered on a business’s credit file for six years.
A recent Ministry of Justice consultation has just concluded that if implemented will include the name of any claimants on the Register of CCJs.
The Registry Trust is in favour of the move arguing that introducing claimants names would enhance corporate accountability by allowing civil society organisations, debt advice charities and campaigners to identify firms that were behaving responsibly.
They argue that regulators could supervise firms more effectively as they could readily see from the Register which firms were aggressively enforcing debts and compare actual behaviours to corporate policies on “treating customers fairly”.
An example used was the Financial Conduct Authority’s (FCA) flagship Consumer Duty initiative and other regulators monitoring systems.
Chris Horner, insolvency director with BusinessRescueExpert said: “If a business receives a CCJ it doesn’t necessarily mean it’s fatal but as the statistics and research show it’s a reliable indicator that this could be their fate if they don’t change course.
“Our experience as insolvency practitioners over 15 years confirms this and we’d urge any business threatened with a CCJ or if they have already received one to get in touch.
“Depending on the individual circumstances of a business, they might have more options than they think and we can work with them to create an efficient and effective roadmap to a better future.”