Several people associate County Court Judgements (CCJs) more with individuals who owe repayments rather than businesses, but companies can be served and found against too – with similar consequences. 

What’s more, new research from The Registry Trust has shown a dramatic leap in the number of businesses receiving CCJs through financial distress and becoming insolvent soon after. 

They found that in the past two years alone there has been a 1,216% increase in the number of companies that showed a correlation between receiving a CCJ and then later becoming insolvent through a liquidation or other insolvency process like administration. 

In the latest quarterly statistics for Q2 this year (covering April to June 2023) the number of business judgments recorded saw an annual increase of 9.7% from 30,411 in Q2 2022 to 33,361 in Q2 2023.  

The total value of the combined owed debt also increased by 3.5% from £109 million in Q2 2022 to £113 in Q2 2023 although the average debt decreased by 5.7% from £3,592 to £3,389. 

The research focused on 487 insolvent companies that had received CCJs in a six year period and found that the average time between receiving a CCJ and becoming insolvent was only seven months with 35% of these becoming insolvent after only receiving one judgement against them. 

The risk of a CCJ

While a CCJ is a proven indicator of insolvency for many companies, they carry additional business and personal risk to sole traders. 

This is because they don’t have the same legal protection that limited companies enjoy when it comes to business debt defaults – they can see a direct effect on their own personal credit rating as an example. 

Additionally, if a sole trader received a CCJ then they would be expected to repay any outstanding debts from their own personal finances. 

If a CCJ is received or even threatened then it should absolutely be taken seriously. 

Unlike a winding up petition, a CCJ does not have the standing to force a business to repay its debts. It does give High Court Enforcement Officers and bailiffs the right to visit premises and seize assets up to the value of any outstanding debt owed.

CCJs are logged on the Register of Judgements, Orders and Fines which is publicly available so any supplier, creditors and customers can discover it. They also carry a negative impact on a business’s credit rating which will make future borrowing more difficult and expensive. 

Chris Horner, insolvency director with BusinessRescueExpert said: “The rise of businesses receiving CCJs and ongoing economic difficulties are tough enough but for a lot of firms these demands could push them through their breaking points. 

“The research from The Registry Trust, and our own years of experience, shows that receiving a CCJ is a near certain indicator of a path ultimately leading to insolvency.

“This is why having a conversation with an independent expert business advisor is critically important – especially because you might have more options than you think you have.”

Any director or business owner can get in touch with us anytime to arrange a free initial consultation at their convenience. 

We can run through what’s actually happened to their business, explore other potential threats and plan an effective and efficient way past them.