What Is A Stay Of Execution And How Do I Obtain One?May 20, 2021
If served with a County Court Judgement (CCJ), your business is facing a serious threat – one that can be worrying both professionally and personally.
Failure to pay a CCJ may lead to the appointment of High Court Enforcement Officers (more commonly known as bailiffs) by the creditor.
The bailiffs are then tasked with seizing assets from your business’ premises in order to recoup the debt via sale at auction.
However, there is a way to halt this process: a Stay of Execution.
In this article, we provide an overview of what a Stay of Execution is and how you can obtain one.
What is a Stay of Execution and why apply?
A Stay of Execution is a legal procedure which initially suspends the CCJ while your business considers alternative solutions to settling the debt.
If granted, a company gains time to take action to resolve the situation. Such actions might include:
- An agreement with the bailiffs and creditors to make the debt payments in instalments
- Using the additional time gained to restructure company finances to free up capital
- Seeking opportunities to raise sufficient funds to clear the debt in question
- Engaging the court to either dispute the debt or apply for a repayment plan
Essentially, the Stay of Execution procedure provides extra time and flexibility for a business to seek an alternative method of dealing with company debt.
How to apply for a Stay of Execution
If your business is facing insolvency, and certainly if it has been served a CCJ, you should be looking for support from a specialist in managing company debts.
There are two options when it comes to the application process – either the N245 or N244 form.
An N245 form is used to apply for a repayment plan via the courts. Such an application is only likely to be successful if supported by detailed and transparent bookkeeping; this evidence should demonstrate the business’ ability to sustain repayments at the agreed rate.
Alternatively, a business can use an N244 application form when it wishes to challenge the CCJ. Generally, this precludes a court hearing in which both debtor and creditor will have the opportunity to present their cases.
Note: simply applying for a Stay of Execution does not mean CCJ proceedings immediately cease.
The debt will still be considered live, and a visit from the bailiffs is not impossible. Should the bailiffs attend your business premises, they will usually desist upon seeing a copy of your Stay of Execution application. Instead, they often prefer to wait until a final decision has been made.
A further defensive measure for the debtor is to request an interim Stay of Execution via the Small Claims Court. Such a procedure will immediately, albeit temporarily, halt enforcement action from the CCJ.
The outcome of a Stay of Execution
The outcome of a granted Stay of Execution depends on the type of application.
If an N244 application is upheld, the CCJ will be put on hold until a court hearing has taken place. This hearing involves evidence from both debtor and creditor.
Should an N245 application be accepted, the debtor will repay the creditor in instalments. However, it is absolutely crucial these repayments are timely and in full; defaulting may result in immediate action from bailiffs at your premises.
Of course, application for a Stay of Execution does not necessitate a positive outcome. Should either of the two application types be refused by the courts, there is a legal obligation to repay the debt immediately – and in full.
If a Stay of Execution application has been a consideration, it’s likely that such a situation is going to present stress and worry. However, there are potential solutions available to business owners and directors to manage the situation in a controlled fashion.
There are a range of company debt solutions which may be appropriate to protect both the business and its directors. The team at Hudson Weir have a wealth of experience in guiding businesses through such situations.
If you would like to find out more about how we can support you either in applying for a Stay of Execution or dealing with business (or personal) insolvency, get in touch today for a no-obligation chat.