CCJ - please help very worried

[redface62]

Hello there I'm pretty new to this site, so please bear with me. Myself and husband have a small business (Ltd company) and we have struggled over the last 6 months or so but somehow managed to stay afloat and keep on trading, knowing that when January comes along (Our busiest month of the year) we could keep on going. I did have a problem with a particular creditor and unfortunately I left the company too late to pay the 4k debt off. We received a CCJ in December, I responded within 14 days and due to my naivety as haven't experienced anything like this before, I stated I would pay 1k back each month until the debt had been paid off. I assumed this would affect our business credit rating for the future with new creditors and stupidly didn't think my creditors I currently have, which I pay would be notified of this! One of my main creditors called me today to say we couldn't have any credit from them due to a CCJ coming up on their system from the company. I'm now frightened to death that the bank will take my overdraft off me (currently 10k) in debt, (I know but its all due to cashflow so I suppose use it as a temporary loan) and all my other creditors wont allow me any credit (I pay all my creditors each month so no CCJ's with them). We normally have a very busy January due to the nature of the business and I will be completely stuck if I can't get any credit. I cant use any personal money as the business already owes me 8k as I had to pay one creditor with my credit card. Could anyone tell me if the bank and suppliers are updated with CCJ's? If so then the business will definitely go under as I wont be able to buy the goods to complete the jobs so wont be able to receive the balances that will be owed from customers. Many thanks for your comments and advise with this.

 

[Mr D]

Is the business able to pay its bills?

 

[Ian J]

Could anyone tell me if the bank and suppliers are updated with CCJ's? .

No-one is automatically notified of CCJs but many companies subscribe to various services that will notify them of any changes in credit ratings for their nominated companies. I'm sure that banks will subscribe to this service.

Another possibility is that your supplier credit insured his customers and the insurance limited was pulled by the insurance company

 

[Gavin Bates]

Hi

As Ian has already mentioned once you have a CCJ it will be on various credit rating agency's data. It then depends on whether or not your suppliers / bank use one of these credit rating agency's. I would expect for example that the bank will be aware of the CCJ. That doesn't necessary mean that they will reduce the facility. It may be best to talk to them and explain the situation.

I hope this helps

Regards

Gavin

 

[redface62]

thank you for your messages - sorry still trying to work out how to individually reply to them! I would assume that the majority of my creditors will subscribe to the services mentioned as they are the 'big boys' so not small business'. So as far as I can see we are scuppered. I had a call from the bank in December asking why we are always very close to our overdraft limit and I assured them that January would change this as it usually does. They looked at the history and agreed so I really don't want to call them as it will make them more aware of our situation. Feel pretty sick today. My husband and I worked out the business finances income and expenditure and being really honest with each other we know that the business is more or less over. We owe the inland revenue 14k with a payment plan already in place and various creditors totalling to approx 41k plus salary to 3 employees. We are owed from customers balances of around 40k and hoping to have sales this month of around 50k (which would mean 25k) as customers pay half deposit and remainder half balance on completion of the job, but then we need to purchase the goods in order to do the work and if we cant get credit then what? Plus if the business is going to go into insolvency (sorry is that the correct term?) then I don't want to let any customers down owing them money if we cant do the work for them (sorry it doesn't sit well with me) plus I don't want people knocking on my door in the middle of the night saying I owe them money!
Sorry forgot to mention we are ltd company, have a bathroom business with a showroom. As I mentioned we do not have any personal savings and very very reluctant to use my own personal credit card as the company already owes me 8k and both of us didn't receive a salary in December due to no money in the business account. We are both salaried at 30k each, no dividends taken out of the business and i'm personally owed money from the business with my 8k. apologies if I'm just off loading and it isn't making sense but I just don't know what to do for the best. Thank you in advance for any replies to this

 

[redface62]

Is the business able to pay its bills?

Yes the business can pay some bills as balances are due and we will sell approx 50k this month

 

[finleydesign]

Not sure it would even be in the banks best interest to withdraw the overdraft anyway, as this would push you into further issues, most likely liquidate and they won't get anything by the sounds of things, so I would just leave it to run it's cause, if they find out they find out, but instant demand of overdraft won't work for them

 

[Gavin Bates]

I think you need to take advice from an IP because you would be entering very difficult area if you take deposits with a real concern whether or not the work will be complete.

I am happy to help if required.

Regards

Gavin

 

[Lisa Thomas]

Have you produced any cash flow forecasts?

 

[redface62]

I think you need to take advice from an IP because you would be entering very difficult area if you take deposits with a real concern whether or not the work will be complete.

I am happy to help if required.

Regards

Gavin

Thanks Gavin but surely small business' usually have cash flow issues and I do know that the work can be completed. I understand that knowing to trade whilst insolvent isn't the issue just yet. If the bank take the overdraft off us then yes it would ensure that we become insolvent and I wouldnt carry on selling. As a safeguard could we not set up another business bank account and use that to make payments on debit card and take deposits without the bank we already have taking 10k from us so allowing us to carry on trading?

 

[JohnMusik]

You can open new business account but you might have issue opening new account due to CCJ.

You can stop taking new orders and only fulfil existing orders and then liquidate once they are delivered. During this period, you can open a new business and start trading through that. I don't see this being an issue but you definitely need to speak to IP even if you don't go ahead with liquidation.