We saw last week that obtaining a judgment against a company can be an effective way to recover debt owed by a company. Unfortunately, the existence of a County Court Judgment (“CCJ”) (or, on occasion, High Court Judgment) is sometimes not enough to coerce a Defendant into paying what is owed and the onus falls on you, the Claimant, to take steps to enforce against judgment debtors who still fail to pay.
When can I enforce a CCJ?
There are various methods of enforcing a CCJ which a successful Claimant can employ, but first the company debtor must have been given the opportunity to pay the judgment debt and either have failed to pay the whole amount by the date specified in the CCJ, or have failed to pay an instalment due under the terms of the CCJ. Unless a particular time for payment is specified, the general rule is that it should be paid within 14 days of the CCJ being given.
Is there a time limit for enforcement?
Not as such, no. However, delay can have consequences and typically the sooner enforcement action is taken on an unpaid judgment debt, the better. For some methods of enforcement, you will need the permission of the Court to enforce if six years have passed since the judgment was given.
Is it worth pursuing?
As we have looked at previously, it is prudent to consider at the outset whether a company is worth suing and then later whether a judgment debt is worth enforcing. If the company doesn’t have sufficient funds to pay or assets to enforce against, you may consider that it is potentially not worth proceeding with enforcement action, as the funds spent to enforce may not yield a positive financial result. Enquiries can be made about the debtor company’s financial position which may help the decision-making process.
As a judgment creditor you may need to act quickly in order to ensure that assets are not dissipated by the debtor. Freezing injunctions are often a useful tool to ensure that an individual or company’s assets are not put out of a creditor’s reach.
So how can I enforce?
Popular enforcement methods where the debtor is a company include (but are not limited to):
Third Party Debt Orders
Where the judgment debtor is owed money by a third party, those funds can be seized from the third party for your benefit. This method is particularly useful where there is a supply chain and your judgment debtor is owed money by a company further up the chain. It means that you can essentially cut out the middle man and go straight to the top of the chain.
We looked previously at insolvency proceedings as a method of recovering debt from a company. They can also be used as an effective enforcement method where the judgment debt is £750 or more. If a winding up order is made, the judgment debtor’s assets will be realised by a liquidator and the funds distributed to the creditors. One effect that a winding up order has is to freeze the assets (including the bank accounts) of a debtor company.
Taking control of goods
If a debtor company has goods of a significant value (for example, machinery, computers or stock), you can issue a warrant (or writ in the High Court) of control, which directs an enforcement officer to take control of and sell a judgment debtor’s goods to raise funds to satisfy the debt. These goods must not be exempt goods or belong to a third party.
A charging order is a way of securing a judgment debt by imposing a charge over a judgment debtor’s land, securities or certain other assets. In terms of land, a charging order would usually prevent the judgment debtor from selling the land without paying what is owed to you. If the company does not sell the land, you can apply for an order for sale of the property.
If you would like to discuss a debt or judgment debt owed to you by a company please contact our experienced debt recovery team on 0113 2449931.