My Company Has a CCJ Made Against It - What Should I Do?
When your company receives a County Court Judgement (CCJ) and assuming you cannot immediately settle it, the creditor will take immediate action against you. There are several different options they can take. These include:
- Charging orders
- Third-party debt orders
- Bailiffs and sheriffs
Allowing a creditor to take any enforcement against your company and its assets is not ideal.
What steps can you take to protect your company from CCJ enforcement?
If your company has a CCJ made against it, you must act quickly to ensure that the creditor does not take any action against the company. The formal options you can take are:
Creditors Voluntary Liquidation
If a creditor has issued execution against a company's goods or land, they are entitled to keep the benefits of the execution when the company is liquidated before it is completed.
The liquidation is commenced when the creditor receives notice of the shareholders meeting to pass the necessary resolution to wind up the company. The execution is completed once the instructing creditor has received the money from the sale of the company’s assets.
To carry out this kind of liquidation, you need to have a 75% shareholder vote to pass a winding-up resolution. You must tell the creditors about this meeting at least 7 days before it happens and advertise it in the Gazette. After this meeting, give the statement to the liquidator who will send it to Companies House.
Company Voluntary Arrangement (CVA)
A CVA is an agreement between a company and its creditors to pay an outstanding liability over a period of time, typically 3 to 5 years. If your company cannot afford to pay the debt in full, creditors may be open to accepting a part payment.
As a part of this, you can add a moratorium to prevent further creditor action. This can give your company some breathing space by preventing creditor enforcement until the result of a vote on the CVA by the creditors is concluded.
Another option open to your company is to enter administration. This will automatically provide your company with a moratorium and therefore safeguard your company assets immediately. This will give the director and nominated administrator 2 weeks to work out a plan.
Once the company has entered into administration, the administrators are in control and can decide whether to keep the business trading with the view of selling it, or they can choose to cease trading and look to sell the assets of the company.
Administration is often a stepping stone towards other insolvency processes, for example, starting a CVA. Administrators and directors will need to decide what they think the best option for the company and the creditors will be.
Understanding the options your company can take when a CCJ is taken out against it and the implications of the different options is a good starting point. You need to work out the best option to take for the particular circumstances you are in, particularly if you want to protect your company’s assets.
While it’s good to know what options are available, it’s best to seek professional advice before commencing with any of them.
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