Receiving a CCJ can stop you in your tracks – especially if you weren’t expecting one. 

The fundamental threat it carries to the future of a business will make any director pause and consider their response. 

Which in the first instance is the best response as panic can lead to unhelpful decisions and actions that can be harder to recover from than taking a beat and thinking things through. 

Fortunately, there are some working defences from this position which we’ll discuss in this article but your first decision, which is also the easiest, should always be to get some impartial, professional advice as quickly as you can. 

Then you will be fully prepared for the steps you can contemplate taking. 

How to stop a County Court Judgement (CCJ)

After you receive a CCJ, the best way to stop it from proceeding any further depends on your specific circumstances – specifically your ability to pay.

Negotiating a Payment Agreement:

  • If you accept that you owe the debt but cannot pay it immediately then your best option would be to reach an informal repayment agreement with the creditor. This is quicker than applying to the court but requires the full cooperation from the creditor and High Court Enforcement Officers (HCEOs) if they have become involved at this stage. 
  • If an informal payment arrangement can’t be reached for whatever reason, you can apply to the court for a “stay of execution”. This will suspend any CCJ while a payment agreement is considered.  This is done by submitting form N245, which includes an income and expenditure assessment to demonstrate what you can afford to repay.
  • You should request an interim stay of execution along with your application. This prevents HCEOs from taking any action against you while the court considers your payment agreement request.
  • The judge may request confirmation from creditors and may ask for further evidence of your means to pay before deciding whether to allow instalment payments. 
  • If the court accepts your request for a payment plan then you must make every payment in full and on time, every time. Otherwise HCEOs can attend your business premises to recover the full outstanding balance or seize assets for sale.

Challenging the CCJ:

  • If you believe the CCJ has been issued incorrectly for any reason then it can be challenged. 
  • It must be challenged within 30 days of receiving the CCJ and has to be done at the same county court where the original judgement was submitted. 
  • A fee must be paid and form N244 completed providing specific information and evidence as to why the debt is not due. This should include a full defence with a witness statement and documentary evidence supporting your claim.
  •  You can also request an interim stay of execution to prevent enforcement action while the court reviews the challenge.
  • If the judge is persuaded that the debt may not be due then the CCJ will likely be temporarily set aside and a stay of execution granted pending a subsequent full hearing where a full defence will have to be presented.

If the debt is proven as valid and it cannot be paid in full, have a repayment plan agreed or have a stay of execution granted then the next realistic stage will be to consider an insolvency option.

Insolvency Solutions when a CCJ stay is denied

  • Administration: This procedure involves appointing an external administrator to temporarily take control of the company and its assets. The administrator will assess the company’s financial situation and try to rescue the business or, if that’s not possible, try to realise assets in order to pay creditors
  • Company Voluntary Arrangement (CVA): A CVA is a legally binding agreement between a company and its creditors that, in return for writing off a proportion of accumulated debt, means it will repay the remaining amount through a series of set monthly repayments. This brings certainty and allows the company to repay arrears at a more manageable rate and level
  • Creditors’ Voluntary Liquidation (CVL): The final step would be if the company is insolvent, cannot reasonably pay creditors and clear its arrears. This would then see the company cease trading, close down and have its assets sold to repay creditors.

The important thing to remember about all of these procedures is that the directors retain an element of control and influence over them. 

If directors don’t tackle their CCJ in a timely and serious manner then they could eventually see their company closed down through a compulsory liquidation which is far less appealing prospect. 

If you receive a CCJ, get in touch with us as soon as you can. 

We can let you know what your immediate options are and what you can do – right now – to help protect the business you’ve spent months and years building.