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If you have decided that a charging order is the best option for your business in terms of recovering commercial debt, the next step is understanding the process of obtaining the order.

The technical term for beginning this process is 'issuing' an application, and we give a brief overview of how this is done. However, your best option for successfully obtaining an order in a timely, cost-effective manner is always to get help from the experts. Get in touch today to find out how we can help. Call us on 0151 659 1070 or complete our online enquiry form.

Issuing a charging order

A charging order can only be obtained if you have an existing court order against your debtor telling them to pay you the money they owe.

Do your research

Before taking the time and expense involved in an application for a charging order, it is important to do your due diligence to check that:

  • Your debtor actually owns the property in question (for example by performing a land registry search), and
  • That you will actually get your money back if that property is sold. There may already be other creditors such as mortgage lenders who take priority, such that you will only be entitled to what is left after these other debts have been paid out of the proceeds of the sale.

These searches will also be important when it comes to actually issuing the application, as you will be asked to give details of all the owners of a property, as well as any other individual or business which has an interest in its sale.

Apply to Court

To do this, you will have to send a completed N379 form along with a copy of any land registry entries and the £110 application fee. You cannot claim the fee back at this but you can seek recovery of the fee if you are successful in obtaining the charging order.

 If you are granted an interim charging order, this will prevent your debtor from selling their assets until a hearing about whether the order should be made final has occurred. You will also be unable to force a debtor to sell the assets the interim charging order applies to before this hearing.

Applications should be 'without notice'

This means that your debtor is not made aware of the application before it is decided upon (initially on an interim basis) by a judge. You mustn't tip off the debtor to the fact that an application is being made because this could allow the debtor the opportunity to dispose of the property before a charging order in respect of it comes into effect

Interim orders

Once the Court has received your application, the Court will issue an 'interim' charging order, which protects your potential interest by preventing the debtor from dealing with the property subject to the order until a final hearing can be held.

An interim charging order will need to be registered with the HM Land Registry, so it appears on the title. If this is not done, it may leave the property open to being sold in the interim and the final charge not being satisfied. The Court will allow 28 days for any objections to be submitted as to why the charge should not be made final.

Final orders

The final hearing will be 'with notice', meaning that the debtor will be invited to attend and make any arguments they wish to make. At the final hearing, the Court will hear arguments from both sides as to whether the charging order should or should not be made final. If you are granted a Final Charge at the Hearing you can then look to begin the process and apply for an order of sale of the property or assets.

Contact our Commercial Debt Recovery Lawyers in Liverpool, Wirral and Merseyside today

If you are considering issuing a charging order, our specialist team of commercial debt recovery lawyers can help you to do so efficiently and at minimum cost. We also have a wealth of experience in the other commercial debt recovery options open to your business, helping you to recoup the money you are owed quickly and cost-effectively. Call us today on 0151 659 1070 or complete our online enquiry form and a member of our team will be back in you.

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