There will be various affects if a County Court Judgment (CCJ) is issued against a company. Whether the debt is then paid or not the company credit rating will be negatively affected. If the debt is not paid further enforcement action can be taken.
- Are Directors liable for a company Judgments?
- Affect of a Judgment on Company Credit Rating
- Does a CCJ lead to further action against the Company?
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Are Directors personally liable for a Company CCJ?
Generally speaking the Director’s are not liable for company debt. This is no different if a County Court Judgment is issued. The Judgment applies to the company only. It does not implicate the Directors in any way.
The only way a director or anyone else can become personally liable for a company debt is if they give a personal guarantees. Where a guarantee has been given they are then responsible for paying the debt if the company cannot or will not do so.
Will a CCJ negatively affect the Company Credit Rating?
A significant result of a County Court Judgment is that the company credit rating will be damaged. Once issued it will be advertised in the Stubbs Gazette and recorded on the company’s credit file. This record will remain for 6 years from the date of issue even if the debt is subsequently paid in full.
The existence of the CCJ will then be flagged whenever a credit check is carried out. This will make it much harder for the company to borrow more money. In addition it will be harder to open new lines of credit with trade suppliers.
The existence of a CCJ may also mean that the bank becomes increasingly nervous about the financial stability of the company. As a result it may take action to reduce existing overdraft or credit card facilities.
A CCJ can negatively influence new Clients
If the company sells to other businesses (B2B) a CCJ can make winning new clients more difficult. It is common for companies to carry out credit checks against potential suppliers as part of their buying criteria.
Such a credit check will highlight that the company has a CCJ. Its financial stability may then be called into question. As a result a new customer could be frightened off as they are concerned about the long term viability of the company as a supplier.
A CCJ may lead to further action against the Company
If a company receives a County Court Judgment that cannot be paid it must not be ignored. Every attempt must be made to agree payment in sensible affordable instalments.
If after a Judgment is issued it is either ignored or an agreement to repay the debt cannot be reached the creditor may then decide to issue a statutory demand. After 21 days from receiving a statutory demand a petition to wind up the company can be submitted.
Not responding to and ultimately not paying a CCJ can have very serious consequences for a company. If a Judgment has been issued against your company which cannot be paid the business may be insolvent. You must then act swiftly to implement a rescue plan.