Unpaid CCJ offers early ‘Insolvency Warning sign’ says new data

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New data from the Registry Trust has indicated that 47% of businesses that became insolvent in May and June 2021 had an outstanding county court judgment (CCJ) against them. Whilst 78% of those who became insolvent with an outstanding CCJ had received their first CCJ within the previous 999 days.

With the Insolvency Service’s latest corporate insolvency figures for August 2021 showing a 71.1% increase compared to August 2020, the Registry Trust says that this insight could help to identify ‘early warning signs’ for the increasing number of companies facing collapse in the wake of the Covid-19 pandemic. Supporting the Insolvency Service’s new five-year strategy which includes ‘a new approach, through education and guidance, to support directors to help prevent insolvency and to learn from the experience of a business failure.”’

The data analysis, which maintains the Register of Judgments, Orders, and Fines for the UK & Ireland, compares commercial CCJ data from the Register to commercial insolvency data from The Gazette. Of the 79 businesses that became insolvent in May and June 2021, 47% also appeared on the Register of Judgments, Orders and Fines, which means they had received a commercial CCJ in the past six years which was still outstanding (either because it had not been paid or had been paid but not formally ‘satisfied’). Of those that appeared in both datasets, 22% of companies eventually became insolvent after getting just one CCJ and 78% of them became insolvent within 999 days. The higher the value of the first CCJ received by these companies, the fewer the number of days until they became insolvent.

Registry Trust Data Analyst Millie Corless said “The unfortunate reality of having an outstanding commercial CCJ on our Register is reduced access to credit and borrowing, which can be detrimental to a business’ survival. I wanted to find out if a commercial CCJ is an early indicator of insolvency so that this information could be used to offer targeted support to businesses that are at risk. As part of our mission to provide ‘public data for the public good’, we offer a range of services via our website TrustOnline to organisations like debt management and insolvency companies, including providing specific information about businesses with outstanding CCJs. These new findings will hopefully encourage them to make contact with potentially vulnerable companies at an earlier stage to help them try and avoid insolvency.”

Registry Trust CEO Lex Jones added “Our data provides a live indicator of indebtedness for both businesses and consumers in the UK & Ireland and contains a wealth of information that can be used to inform policymaking, responsible lending and borrowing, and good business decisions. The economic recovery from the Covid-19 pandemic is going to be dependent on up-to-the-minute insight into how businesses, especially smaller companies which are more susceptible to financial decline if they can’t access affordable credit in challenging times, are faring so that the necessary measures and interventions can be put in place. Educating businesses and consumers on how to deal with, and in particular how to ‘satisfy’, CCJs so that they don’t hamper their ability to do business effectively is vital. The fact that they may be at risk of insolvency should make this a business priority.”

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