Table of Contents
In Short
- An interim charging order secures debt against business property and prevents its sale before a full order is granted.
- It follows a creditor’s claim when a business fails to pay debts, typically after receiving a County Court Judgment (CCJ).
- You can oppose the order through the court.
Tips for Businesses
If your business faces an interim charging order, seek legal advice immediately. You may be able to challenge it through the Civil National Business Centre or County Court, potentially avoiding a full charging order or property sale.
Running a business can sometimes be an expensive task. Business owners like you may need to buy stock, pay for services, and ensure you keep on top of regular bills. To help with finances and cash flow, businesses often request and receive credit for purchased items. This means you arrange to pay your creditor later for the purchase. If so, you become their debtor as you owe them a debt. However, you must pay your unsecured debt once it is due. Otherwise, there could be legal repercussions, such as a court order or court hearing or risks to the debtor’s property. This article will explain interim charging orders and the legal implications for business owners.
What is an Interim Charging Order?
An interim charging order is the first stage of a full charging order court placed on a business or an individual. This charge is placed on their property and is a way of securing the debt you owe a creditor. Therefore, this charge equates to the amount your business owes a creditor rather than the total amount the property may be worth. This amount goes to them before you receive the remaining money when you sell the property. The interim order for a charging order effectively prevents you from selling your business property until the grant of a full charging order.
However, receiving an interim charging order or a full charging order for your business does not mean you must sell the property. You will only need to sell the business property if the court issues an ‘order for sale’ against it.
Why Might My Business Receive an Interim Charging Order?
A court may place an interim charging order on your business property because a creditor you owe money to has told the court you are not paying it. This could be because you received a County Court Judgment (CCJ) or another court order and did not pay the debt when you were supposed to. It could also be because you have defaulted on your instalment plan for the debt repayment.
A creditor must apply to the court for the full charging order, which is a two-stage process. First, they request the interim order.
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How Do I Oppose an Interim Charging Order?
If your business wishes to oppose an interim charging order, you can do so through the following:
- the Civil National Business Centre, or
- a County Court.
If you oppose an interim charging order through the Civil National Business Centre, you can make the request up to 14 days after you receive the order. A district judge will hear the request without a hearing; no fee is required.
Suppose you oppose an interim charging order through the County Court. In that case, however, there will be a hearing that you must attend. You will need to provide evidence of why you are challenging the order. You must do so at least seven days before the hearing. The creditor can also provide evidence, and during the hearing. After this, the judge will listen to the other party’s evidence and decide whether to make a final order.
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Opposing a Final Charging Order for an Order for Sale
It is possible to oppose a final charging order and an order for sale in addition to an interim charging order. In addition, you can request that a judge attach conditions to the final charging order.
Key Takeaways
If your business owes a creditor debt and they have been granted a CCJ or a court order for it, and it remains unpaid, they may request the court to issue an interim charging order. This is the first part of an order for a full charging order. The interim charging order stops you from selling any business or property you own before any full charging order is issued. They place a charge of what you owe the creditor on the property. However, an interim and full charging order cannot make you sell the property. This is done through an ‘order for sale’ from the court.
It may be possible to oppose the interim charging order. If so, this can be done through the Civil National Business Centre or a County Court. It is also possible to oppose an order for sale and a full charging order. In addition, you can request that a court grants conditions attached to a full charging order. Getting legal advice when you receive an interim charging order is essential.
If you need help understanding interim charging orders in the UK, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
An interim charging order is a court order issued before a full charging order. It prevents you from selling your business property.
A full charging order is a court order following an interim charging order. This places a charge on the business property to secure a debt owed.
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