Charging orders on company property: how unsecured debts become secured

The two-stage charging order process

A creditor who has obtained a county court judgment (CCJ) against a company and has not been paid can apply to the court for a charging order over company property. The process runs in two stages. First, the court grants an interim charging order without notifying the debtor company, registering a temporary charge on the property. Second, a hearing is held at which the company can contest the order; if no successful challenge is made, the court makes the charge final and absolute.

Once final, the charging order must be registered at the Land Registry (for land) or, in the case of stocks and shares, with the relevant registrar. Registration gives the charging order priority over subsequently registered interests and binds third parties who later acquire the property with notice of the charge.

Can the company oppose a charging order?

Yes. At the final hearing, the company can ask the court to refuse the charging order or impose conditions. Grounds for opposition include: the debt is disputed, the company is in administration or has entered another formal insolvency process, the property is subject to a prior charge that makes a further charge of no practical value, or granting the order would be unjust in all the circumstances.

The court has a broad discretion. In practice, if the CCJ is valid and undisputed, opposition to a charging order is rarely successful unless there are specific procedural grounds or a genuine dispute about the underlying debt. Prompt engagement with a solicitor at the interim stage — before the final order is made — gives the company the best chance of contesting the process or negotiating settlement.

From charging order to forced sale

A charging order does not itself force a sale of the property. It gives the creditor security and priority over unsecured creditors on the asset, and it may deter the company from dealing with the property without clearing the charge. To realise the security, the creditor must make a further application for an order for sale — a separate and more substantive court process at which the court weighs the interests of the company, any co-owners, and other creditors.

For commercial property owned outright by a trading company, an order for sale is a serious threat to the business. Directors who receive notice of a charging order should treat it as urgent, engage a solicitor immediately, and consider whether a negotiated repayment arrangement with the judgment creditor can be reached before the property is at risk of forced sale.