What Does A Stay Of Execution Mean For Limited Companies?
If creditors make several attempts to recover debt from a limited company with no success, then they may be within their rights to file a County Court Judgement (CCJ) against the company. This is a court order that enforces the payment of debt.
When creditors apply for a CCJ, the court will decide whether or not to accept it based on evidence of the debt, the number of attempts that have been made to recover that debt, and the period of time. If it is accepted, the limited company will have 14 days to respond to the notice.
When a limited company is issued with a CCJ it’s essential that they act fast. Failing to respond to the court order could result in more serious action being taken against the company. For example, the business’ credit rating may be severely impacted, or in severe cases, a winding up petition could be issued to facilitate the closure of the company.
If your business is faced with this, you should consult the advice of a licensed insolvency practitioner as soon as possible. In some cases it may be possible to come to an informal agreement with the creditors, such as via a Company Voluntary Arrangement (CVA).
In instances where an agreement cannot be reached or where there is evidence that the claims are inaccurate, it may be possible for limited companies to apply for a stay of execution.
When Can A Stay Of Execution Be Used?
A stay of execution is used to suspend a court judgement against a limited company, giving them time to organise a repayment plan or dispute the debt. The stay of execution prevents the enforcement plan from taking place, giving companies vital time to reorganise their finances or to challenge the debt. This may include the following paths of action:
- An informal arrangement with bailiffs and creditors to make the debt payments in instalments
- Restructuring company finances to free up capital
- Engaging the court to dispute the debt or apply for a repayment plan
How To Apply For A Stay Of Execution
There are two options for applying for a stay of execution. These are:
N245 Form: If you are applying for a stay of execution with hopes of organising a repayment plan then you will need to use a N245 form. This application will need to be supported by thorough and accurate bookkeeping to prove that the company can achieve the agreed payment dates.
N244 Form: This is the method for applying for a stay of execution when the business wants to challenge the order and dispute the debt. If the application is accepted a court hearing will follow in order for the case to be presented.
If the stay of execution is not granted and you are unable to repay the debt in full, you should consider an insolvency procedure, such as voluntary liquidation. Either way, when struggling with debt your first action should be to seek professional guidance from a licensed insolvency practitioner. They will be able to advise you on the best path forward, whether you’re facing severe claims from creditors or are at the early stages of financial difficulty.
Please don’t hesitate to get in touch with our experienced team at My Liquidation for confidential advice.
