The number of County Court Judgements (CCJs) issued to London businesses over the last three years has increased by 151%, the biggest percentage increase across the UK.
Research by UK credit check specialist Creditsafe paints a bleak picture for businesses up and down the country, with 54,371 CCJs issued from May 2018 to April 2019, compared to 26,413 in the same period two years prior.
A CCJ is a court order that a creditor (someone that has extended services or products to you at a cost) has taken out against you for an unpaid debt. It is the action of the courts instructed by the creditor to get the money back to the person/company owed.
Businesses in Greater London saw the greatest rise in CCJs filed against them – with 7,100 in 2016-2017, rising to 17,827 in 2018-2019, an increase of 151%. The top three regions outside of Greater London were East Anglia (121%), Northern Ireland (112%) and the South East (95%). Despite being at the bottom of the table, Scotland still issued 1,611 CCJs (or decrees as they are known in Scotland) in 2018-2019, an increase of 41%.
Records of judgments are kept on file for six years unless the debtor pays the full amount within a month, which can make it more difficult to get credit.
David Walters, head of data at Creditsafe, said:
“The findings are damning and show that businesses across the country are struggling to keep up with repayments. Though we can’t say for sure, it’s likely that the volatility surrounding Brexit has had a negative effect, and that will continue until we know for sure what form Brexit is going to take.
“Of course, running a business is by no means easy, and especially not during a time of economic uncertainty, but being issued a CCJ will stay on your credit file for six years, which can be accessed by any member of the public for a small fee – they’ll be able to see your name, address, the case and court number and the amount of money owed. Having a CCJ on file will likely hinder any business as it will make it harder to take out further credit, and get out of financial difficulty.”
Recent data released by Creditsafe also found an increase in the number of insolvencies across every UK region from May 2016 to April 2019. Northern Ireland saw the biggest rise with a 114% increase in the number of failing businesses in the area; the West Midlands had the fewest insolvencies over the past three years, although the figure had still increased by 10%.
Marie Dancer, managing partner at Richard Nelson LLP, commented: “As Creditsafe mention, we are in times of economic uncertainty. As a law firm, we have also been aware of the increased demand for commercial litigation services. But it does not make it any less surprising that businesses would take on services or goods that they could not pay for.
“Debt can affect the ongoing wellbeing of a business and the financial wellbeing of the business owners. This, in turn, can affect their productivity and business growth. CCJs are kept on businesses’ files for six years. We know that business disputes can be lengthy, and the longer they go on, the more it is likely to cost.”
Comparing the total number of CCJs issued across each region from 2016/17 to 2018/19, the percentage increases were as follows:
- Greater London – 151%
- East Anglia – 121%
- Northern Ireland – 112%
- South East – 95%
- North West – 93%
- West Midlands – 91%
- North East – 90%
- Wales – 85%
- South West – 85%
- East Midlands – 80%
- Yorkshire and Humberside – 69%
- Scotland – 41%