Top Service News
Twenty Percent drop in County Court Judgements against England & Wales Businesses
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New figures released by the Registry Trust (January) state that there was a 20 percent drop year-on-year, in the number of County Court Judgments (CCJs) registered against businesses in England & Wales in Q4 2019[1]
The total number of judgments against all businesses decreased from 29,303 in Q4 2018 to 23,418 in Q4 2019, and was accompanied by a 21 percent drop in the total value of judgments from £117,546,664 in Q4 2018, to £92,311,503 in Q4 2019.
The fall in business CCJs largely affected incorporated businesses. The numbers fell by 27 percent, from 21,373 in Q4 2018 to 15,626 in Q4 2019. Judgments against incorporated businesses account for 67 percent of all business judgment numbers and 74 percent of their total value.
Statistics released by the Registry Trust are a good indicator of the economy, however the construction industry contributes seven percent of the economy and received the highest number of insolvencies by sector in the 12 months ending Q4 2019, the construction industry group saw the largest increase in underlying insolvency volumes with 3,198 (69 more, a 2.2% increase) compared with the 12 months ending Q3 2019[2].
Emma Miller, Top Service Company Director said: “The spike in the number of insolvencies felt by the construction industry lies in part to the ongoing economic uncertainty across the UK, driven by political unrest, Brexit uncertainty, delays in investment for large construction projects and heavy competition for contracts pushing construction companies to work to tight margins; plus the wave of several high-profile corporations going into administration which has rocked the industry. These economic factors have undoubtedly had an impact on the drop in company CCJ’s. With all this uncertainty, filing for a CCJ brings considerable risk of expense to the claimant which has contributed to the number of CCJ’s dropping, we have also seen a sharp fall in the value of CCJ’s claimed for. The smaller the value of the claim the less companies and individuals are inclined to take the risk to proceed with court action. There are many myths around the process and outcomes of serving a company with a CCJ. We recommend the claimant take all reasonable steps to collect the monies owed before entering into litigation and seek expert advice to fully understand the process and responsibilities in taking court action. ”
What is a County Court Judgement and what to consider?
A County Court Judgement (CCJ) is essentially a court order, issued by a county court, that enforces the payment of a debt. A CCJ acts as evidence of insolvency and can be used to close a company by its creditors. Court fees and solicitors’ fees can be high and although added to the claim amount, if the debtor doesn’t pay the claimant will be left to pay the court fees. Regardless of how spurious a defence if filed by the defendant, the correct process has to be followed, incurring further fees. Once a claim is submitted, there can be a lengthy wait for a court date. Despite many thinking that if the claimant wins the case in court the other side pays the costs – that is not always the case.
There of course many options when considering legal action to recover a debt. Information is key, especially within the construction sector which relies heavily on reputation. Consider local knowledge, trading history, previous credit information and information gathered through the collection process. The more information acquired will not only help guide the claimant to the most effective type of action but will be used as evidence in court, increasing the claimant’s chances of a successful collection through legal action.
Instructing a third-party collections service:
With the financial uncertainty of proceeding with a CCJ, it is wise to seek professional and expert advice. Instructing a collections service will ensure that all of the required pre-action protocols are covered prior to legal action and trained negotiators will get the best outcome in court. Instructing a third party will take any personal relationships out of the equation which businesses can struggle with when collecting debt. A collections service provider will focus on relevant credit information to form a collection strategy and should advise to proceed only if sufficient evidence is available.
For enforcement advice or more information on credit management, debt prevention and recovery services, please contact Top Service by calling 01527 518800 or email helpdesk@top-service.co.uk.
[1] Counnty Court Judgements against England & Wales businesses fall 20% year on year in Q4
[2] Company insolvency statistics, Q4 October to
December 2019