What is a Stay of Execution?

A Stay of Execution is a procedure that, when granted, allows the Courts to suspend any current County Court Judgements (CCJs) against a company to allow time for them to agree on a payment plan or schedule an appeal hearing.

When a limited company is unable to pay a county court judgement, the creditor owed can enlist the help of High Court Enforcement Officers (HCEOs), more commonly referred to as bailiffs. Bailiffs can seize assets from the company to sell in order to repay debts owed.

A company may avoid this however, by applying for a ‘stay of execution’ that prevents a CCJ from going ahead (temporarily) and prohibits bailiffs attending their business premises for an agreed period of time.

The stay of execution allows companies much needed time to assess and sort their financial affairs and potentially, seek a full hearing to discuss the debt and agree on a repayment plan.

How do you apply for a stay of execution?

To apply for a stay of execution, you’ll need to fill out a particular form (N245) to help create a payment plan if this is the agreed option by creditors. You may not need to use the form if you can successfully negotiate with creditors and HCEOs, but this will require full agreement from all parties.

This is often best mediated by a professional Insolvency Practitioner who can advise you on what type of payment plan works for you. Our expert Insolvency Practitioners can help to assist your business with financial planning and negotiations, so get in touch as soon as you see any signs of trouble.

What to include in a stay of execution

A stay of execution application will be different depending on the reasons why you need a CCJ to be temporarily suspended. In most cases, you will need to create a viable repayment agreement through the aforementioned N245 form detailing what your company can afford.

You will also have to ask the courts, whilst filing the above form, for an interim stay of execution to prevent HCEOs taking action whilst the courts and creditors consider your payment plan.

The judge in charge of your case will require the creditor to formally agree, or disagree, to the repayment terms and then decide on how they will proceed with claiming back monies owed.

Can I apply for a stay of execution if I am disputing the debt owed?

You can still apply for a stay of execution if you are disputing your debt – this will still potentially provide you with much needed time to collect necessary evidence to support your dispute claim before HCEOs are involved.

You’ll need to use form N244 and provide as much information as you can as to why you do not owe the debt in question – you’ll also need clear evidence and a full defence.

Can you challenge a CCJ without a stay of execution?

You can challenge a CCJ without a stay of execution, but you will run the risk of HCEOs attending your premises and eventually seizing assets to pay off the debt owed. In this scenario, you will not be allowed to stop the bailiffs from seizing goods.

It is always in your best interests to apply for a stay of execution and grant yourself the time necessary to either:

gather the money to pay the debt;
agree on a payment plan; or
dispute the debt owed.

Not applying for a stay of execution opens you up to legal action through the courts whether you rightfully owe the debt or not.

What happens when a stay of execution is granted?

When a stay of execution is granted, your company will have the time (safe from court enforcement action) to be able to either:

Proceed with a full hearing to prove that the debt isn’t owed, is inaccurate or wasn’t conducted using the correct procedures;
Create a plausible repayment plan that all parties agree to, proving that you can repay the debt in specific increments over a certain period of time.

If you choose to appeal the debt, you must have enough credible evidence to prove that you don’t owe the debt in question, otherwise legal action will commence.

If you choose to agree upon a repayment plan, you must make payments on time in full, or HCEOs will be able to legally attend your premises to seize assets to sell.

What happens if a stay of execution is denied?

If your stay of execution application is not granted, you’ll be liable to pay the debts you owe to the creditor/s in a timely manner – this timeframe may be specified by the courts and you could be forced to pay in full immediately.

If you are unable to pay the debt, whether this is in full or in increments, you may have to consider an alternative route to settle debts or close down your business. You’ll need to speak with a qualified insolvency practitioner to discuss which formal insolvency process is right for you.

You may have to consider company liquidation in order to dissolve your company from the official Companies House register and remove liability of debt. Voluntary liquidation means that you choose to have your company liquidated, your assets sold and your debts paid off with the funds you receive from any sales.

This may not be the ideal choice for you, but sometimes this will be a business owner’s only option to avoid legal trouble through non-payment of large owed debts.

FAQs

How long is a stay of execution?

A stay of execution typically lasts for 30 days. This, in most cases, covers the amount of time it takes for an appeal to be made and reviewed by the courts.

It is also adequate time for a business to review their finances, speak with an Insolvency Practitioner and formulate a viable repayment plan.

Is an appeal a stay of execution?

An appeal is where you formally deny that you owe the debt that you have received a CCJ for. If you have sufficient evidence to state that you have already paid the debt, the debt is incorrect or that the creditor followed incorrect procedures in an attempt to recover the debt, you can appeal it through the courts.

A stay of execution will allow you time to gather this evidence and create a defence before presenting to the courts – in this time, you’ll be free from creditor or bailiff

What is a stay of execution and how does it affect a limited company?