Garnishee Order over a Bank Account - Another method of enforcing a County Court Judgment (CCJ)

This third party debt order freezes any positive bank balance to the extent needed to pay the sum owed to you

If your company owes money to a supplier and that supplier has obtained a County Court Judgment against your company then that supplier can, via the Court, obtain a Garnishee Order over your Company's bank account. What effect does it have when a Court sends a Garnishee Order to your Bank manager?

It is not very often that a Bank Manager receives a Garnishee Order against one of his customer’s bank accounts in his morning’s post.

If we continue our case study on alternative methods of enforcing CCJ’s against limited companies you will recall that the background is that:

- Your company, Myco Ltd owes £35,000 to Supplier Ltd.

- Supplier Ltd has obtained a County Court Judgment against Myco Ltd.

- Supplier Ltd then paid a further Court Fee and completed a further Court Form so that the Court would order that a Garnishee Order be made against Myco’s bank. (Myco gets no advance warning of this Application – the first that you the director of Myco know about the matter is when you receive a telephone call from your bank manager).

- Let’s say that Myco’s bank is HSBC Bank.

OK – So what can the bank manager be expected to do when he receives the Garnishee Order in his post?

The answer depends on whether:

- There is money in Myco’s bank account or

- There is no money in Myco’s bank account

Let’s imagine there is £20,000 in Myco’s bank account.

If there is £20,000 in Myco’s account the Bank manager is obliged by law to immediately freeze that money then send that £20,000 to Supplier Ltd.

The bank manager can then be expected to be immediately on the telephone to you (in your capacity as the director of Myco) to advise that there is nothing now in the bank account and that he has had to report the matter to head office. You might imagine the alarms and excursions that might then follow.

- How are Myco’s employees going to be paid at the end of the week?

- Will the bank withdraw any overdraft facility that Myco Ltd might have?

- Will the bank put the account on watch?

Alternatively consider the position if there is £40,000 in the Myco Limited bank account.

In this instance the bank will pay out to Supplier Ltd without reference to you the full £35,000 plus Court costs owed to Supplier Ltd.

The rest of the bank manager’s actions will be similar to that noted above. The bank manager now knows that your company (Myco Ltd) is under extreme financial pressure as he is now aware you had the opportunity to pay the CJJ when that Order was granted – You failed to do so - Resulting in Supplier Ltd having to take further enforcement action against Myco Ltd. The last thing that the bank manager might want to do in this scenario is to grant you an overdraft to settle the payroll as in so doing he might put the bank’s own money at risk.

In the further alternative what happens if there is nothing in the Myco Ltd Bank account when the Garnishee Order is received by the Bank Manager?

If the Myco Ltd bank account is overdrawn when the bank manager receives the Garnishee Order clearly he is unable to send any money to Supplier Ltd. The bank would have to go back to Supplier Ltd to advise that there was nothing in the account.

The bank manager could then be expected to start protecting his own position by steadily reducing the overdraft facility of Myco Limited.

It would also result in Supplier Ltd then pursuing a different form of enforcement action such as the issue of a winding up petition against Myco Limited.

What to do if a CCJ has been issued against you?

If a County Court Judgment has been issued against your Company we can assist in freezing that creditors enforcement actions. By contrast if a Garnishee Order has been made you need to take ultra-prompt advice to secure your company’s financial position. We can act very quickly on your behalf to obtain a legal freeze on all uncompleted creditors enforcement actions.  Click on the link if you want to read the options open to you.


Chris Parkman
Chris Parkman
BSc Hons, FABRP, MIPA, FCCA, Insolvency Practitioner

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