Enforcement options if one or more of your creditors holds a County Court Judgment (CCJ)
Have you had a CCJ registered against your Company? Then how do you protect your company from enforcement of that CCJ?
You first need to know how a creditor of your company can enforce a County Court Judgment (CCJ) that they have obtained against your Company before you can consider how can you protect your company from that enforcement process.
If you are sitting on the other side of the fence you might ask "How can I enforce my County Court Judgment (CCJ)"?
The first thing to realise is that nothing at all automatically happens as regards enforcement of the Judgment is concerned after the Judgment has been obtained by the organisation that is owed money by your company..
As far as you are concerned the only automatic events after a County Court Judgment is obtained are administrative actions such as:
- The registration of the Judgment on the Court file and
- The registration of the existence of the Judgment is also filed with an organisation called Registry Trust. That Registry will produce lists of County Court Judgments to third parties for a fee.
- The forwarding of the CCJ document to you by the Court to confirm that a Judgment has been made against your company.
What happens next?
So what next step must a creditor pursue to try to collect a sum due from your company after they have obtained a County Court Judgment?
That creditor has several options – Each option involves them taking extra steps – usually involving the completion of another Court Form and the payment of a further Court Fee.
To explain the options it might be useful to consider an illustrative case study. Let’s say that the name of your company is Myco Ltd and that your supplier who has obtained a CCJ against Myco Ltd for £35,000 is called Supplier Ltd. The options open to Supplier Ltd to enforce the CCJ against your company are as follows:
- To take a further legal step by making a second Application to the Court for an Order that instructs bailiffs (or sheriffs) to take seizure action against assets owned by Myco Ltd - such as the seizure of cars, machinery, office equipment etcetera. This seizure action and the Court Order is called a warrant of execution.
- To issue a Court document against Myco Limited’s bankers which instructs that bank (if the account is in credit) to pay, under Order of the Court, the £35,000 to Supplier Ltd without reference to you. This type of Court action is called a Garnishee Order or Third Party Debt Order.
- Alternatively a Garnishee Order (Third Party Debt Order) can be issued, via the Court, by Supplier Limited against one of Myco Limited’s customers! For instance if an entirely innocent customer of Myco Ltd owed £40,000 to Myco Ltd then Supplier Limited’s Garnishee Court Order could be sent to that customer of Myco Ltd - and that customer would have to pay Supplier Ltd the £35,000 direct.
- In the further alternative Supplier Limited could also serve a statutory demand against Myco Limited as a preliminary to taking winding up steps against Myco Ltd.
- Alternatively it is also open to Supplier Ltd to issue, via the Court, an application for a charge (a charging order) against any freehold property owned by Myco Limited. The effect of a Charging Order when granted is that Supplier Ltd effectively holds a legal mortgage over one of Myco Limited’s properties and can then pursue possession and sale of that property.
- The directors of Myco Ltd might as a further option obtain an Order of the Court to have you personally examined in Court. This is known as an Oral Examination. The purpose of an Oral Examination is to determine what properties or other assets are owned by your company Myco Ltd. Once Supplier Ltd knows what assets Myco Limited owns then Supplier Ltd can better decide which one of the above types of enforcement action is more likely to bear fruit.
Now that you have an overview of the different types of enforcement action you may wish to click on the one or more of the below links to obtain more information about the pros and cons of each type of enforcement action as far as Supplier Limited is concerned.
- Garnishee Order against a Bank (Third Party Debt Order)
- Garnishee Order against a debtor (Third Party Debt Order)
If a CCJ has been ordered by the Court against your Limited Company and your company is then unable to pay that creditor then Purnells can assist you to freeze any attempt by that creditor to take any type of Count Court enforcement action. We can also assist in completely restructuring your company’s financial affairs.
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