Is your business experiencing financial difficulties and you’re not sure what to do? It’s vital that you reach out to a company insolvency expert to discuss your situation. There are many terms that you may come across, and it’s important to ensure that the information you receive is accurate. In this blog, we’re answering the question, what is a stay of execution?
Firstly, we want to outline what it means if your business is becoming insolvent. An insolvent business is one that is struggling with debts. These financial issues can lead to you being unable to pay creditors when bills are due or your liabilities being worth more than your assets.
If you find yourself struggling to pay business debts, it’s crucial that you seek professional advice as soon as possible. Failing to seek advice could lead to further issues and does not show that you are acting within your duties as a director.
What is a stay of execution?
A stay of execution is a process which can be put in place to suspend a CCJ (County Court Judgement). These processes can be put in place to allow a payment agreement to be formed, or a hearing to be held to determine when the payment is due.
A stay of execution is an important legal process which should not be taken lightly. As the company director, you should retain all documents relating to the process.
If the court decides that you owe money and you cannot come to a payment agreement, the high court enforcement officers can apply for a CCJ. If you disagree, you can complete the process to apply for a stay of execution.
What is a County Court Judgement?
A CCJ can be registered against your company if a creditor requests money they are owed from you and you do not respond. A CCJ is a formal recognition that you owe money to someone.
When your business is given a CCJ, you will be told how much money you owe, when you need to pay it by, who you owe the money to and how you can pay it. By meeting these criteria, you can avoid further issues for yourself as the director and your company.
Can I challenge a CCJ?
There are some instances where you might be able to challenge a CCJ against your business. However, you must be able to provide solid evidence of this fact.
You must act quickly when dealing with CCJs, as they can be very serious. All CCJs must be challenged by the court from which they are issued.
What is the application process for a Stay of Execution?
To successfully apply for a Stay of Execution, you must complete an N245 form. This stay of execution application form allows you to outline your income and expenditure, giving you a better understanding of how much money you could afford to pay back.
Having a Stay of Execution in place can provide some much-needed breathing space for directors who are struggling. This process means that further action cannot be taken against your company until the debts are either confirmed or denied through a court hearing.
During the decision process, the High Court will contact the creditor for evidence of the money you owe. They will also look into your income and expenditure statement to determine whether you can pay the amount owed in full or whether it would be more appropriate for you to pay in instalments. This will become known as your repayment plan for the company debt.
What if I fall behind on my repayment plan?
If you are granted the ability to pay back your debt in instalments, it’s crucial that you keep up with them. Failing to keep up with payments could lead to enforcement action and more issues for you, including further action from the High Court Enforcement Officers. These officers would be legally able to visit your business premises to attempt to seize assets and gain items of value to cover the balance owed.
The court makes the decision for your Stay of Execution payment plan based on your financial affairs, and you are legally obliged to follow the correct procedures.
Will I be in trouble if I can’t keep up payments?
If you are denied a Stay of Execution and you cannot pay the debt that is due, you may need to consider your other options. These are likely to include insolvency procedures, such as entering a creditors’ voluntary liquidation.
If you are continually chased for debts with no success for creditors, you may be issued a winding-up petition, which means that your company will be closed down by force, and you will have no say in the matter. Compulsory liquidation can be forced upon any limited company using a winding-up order which outlines the debt and the court hearing date. Failing to respond could lead to enforcement action.
During all liquidation procedures, the licensed insolvency practitioner is required to look into the actions of the director leading up to the issues. This forms part of your director’s conduct report. If wrongdoing is found, then you should be prepared to face the consequences.
We hope this blog has been helpful and answered the question, what is a Stay of Execution? Please don’t hesitate to contact us if you are worried about any financial issues or money that you owe. We are more than happy to provide you with honest, confidential advice that you can trust.
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