Charging Orders and Company Debts: 2026

Obtaining a judgment is an important step in recovering money, but it does not always result in payment. Creditors may still need to choose the right enforcement method and respond to arguments about whether a debt has been discharged.

Two recent authorities provide useful guidance:

• McGowan v Potter [2026] EWHC 595 (Ch), concerning the County Court’s power to enforce charging orders by ordering a sale.
• 56 Fellows Road Ltd v ABC Block Management Ltd [2026] EWCA Civ 401, concerning a director’s personal payment towards a company’s judgment debt.

Together, these decisions show why enforcement strategy matters. A creditor must consider not only what assets may be available, but also who legally owes the money and which court has jurisdiction to take the next step.

What is a charging order?

A charging order secures a judgment debt against an asset owned by the debtor. It is most commonly sought over land, such as a house or commercial property, although it may also be possible to obtain a charge over certain other assets, including shares.

The charge works in a similar way to security. The judgment debt remains outstanding, but the creditor obtains an interest in the asset. If the asset is later sold, the charge may allow the creditor to be paid from the debtor’s equity, subject to priority issues and any earlier mortgages or charges.

A charging order does not usually produce immediate payment. It protects the creditor’s position while further enforcement steps are considered.

A charging order is not an order for sale

It is important to distinguish between:

• A charging order, which secures the debt against the property; and
• An order for sale, which requires the property to be sold so that the debt can potentially be paid.

An order for sale is a separate and more serious step. The court must decide whether selling the property is justified in the circumstances. A creditor cannot assume that obtaining a charging order automatically gives it the right to force a sale.

The court may consider matters such as:

• The amount of equity available after repayment of mortgages and prior charges;
• The value of the judgment debt;
• Whether the debtor has other assets or income;
• The interests of co-owners;
• The effect on family members or other occupiers;
• Whether the property is the debtor’s home; and
• Whether the proposed enforcement is proportionate.

This is why advice from experienced debt recovery solicitors can be important before an application is issued.

What did McGowan v Potter decide?

In McGowan v Potter, the High Court considered whether the County Court had jurisdiction to enforce a charging order by ordering a sale where the relevant debt exceeded £30,000.

There had been uncertainty because provisions of the Law of Property Act 1925 referred to a £30,000 figure. In practice, it was commonly assumed that the County Court’s ability to order a sale was limited to debts of no more than £30,000, with larger matters needing to be dealt with in the High Court.

The High Court clarified that the relevant limit is the County Court’s equity jurisdiction limit, which is currently £350,000.

For debts up to £350,000, the County Court has jurisdiction to enforce a charging order by ordering a sale. A creditor does not need to assume that the matter must be transferred to the High Court merely because the judgment debt is more than £30,000.

The decision removes a potentially costly procedural step for creditors with mid-value judgment debts. It may make enforcement more accessible and reduce delay where a sale is an appropriate remedy.

You can read commentary on the decision from Radcliffe Chambers.

What is the £350,000 limit?

The £350,000 figure is the County Court’s relevant equity jurisdiction limit for this type of enforcement application. It is not a guarantee that the court will order a sale, and it does not mean that every charging order below that value will be enforced in that way.

The limit concerns jurisdiction: whether the County Court has the legal power to deal with the application.

The court must still exercise its discretion. It may refuse an order for sale where the application would be disproportionate, where there is insufficient equity, or where the effect on other people makes a sale inappropriate.

The creditor should therefore assess the case carefully before applying. Relevant questions include:

1. How much equity is actually available?
2. Are there mortgages, restrictions or prior charges?
3. Does the debtor own the property alone?
4. Are children, vulnerable people or other family members living there?
5. Are there other assets that could be enforced against more easily?
6. How long would possession, sale and distribution realistically take?

The judgment may make applications quicker and cheaper, but it does not remove the need for a properly prepared application.

A director’s payment does not automatically clear a company’s debt

The second important decision is 56 Fellows Road Ltd v ABC Block Management Ltd, handed down by the Court of Appeal on 31 March 2026.

The case involved a judgment debt owed by a company. A director made a payment personally from his own bank account during enforcement. The issue was whether that payment automatically discharged the company’s liability.

The Court of Appeal held that it did not. The fact that money has been paid by a director does not, by itself, mean that the company’s judgment debt has been satisfied.

The legal distinction is between:

• The person who owes the judgment debt; and
• The person who happens to provide money during the enforcement process.

A third-party payment may discharge a debt if it is made as the debtor’s agent, on the debtor’s behalf, or is properly authorised or ratified while the payment remains effective. However, a personal payment by a director is not automatically a company payment.

In 56 Fellows Road, the payment was made personally and was later returned to the director. The Court confirmed that the company’s judgment debt remained outstanding and that enforcement could continue.

Practical guidance for creditors

If you hold a judgment against a company, do not assume that a payment from a director has ended the matter.

Before treating the debt as satisfied, establish:

• Who made the payment;
• Which account the money came from;
• Whether the payment was expressly made on behalf of the company;
• Whether the company authorised or ratified it;
• Whether the payment has been returned or reversed; and
• Whether the payment covers the judgment debt, interest and enforcement costs.

A creditor should also consider the available enforcement options against the company. These may include enforcement against company assets, a third-party debt order, a charging order, an order for the company’s examination, insolvency proceedings or enforcement agents.

A director’s personal liability does not arise simply because that individual is a director or has paid money towards the company’s debt. Personal liability may arise through a separate legal route, such as a personal guarantee, a claim concerning unlawful or wrongful conduct, or an insolvency-related claim. The facts and evidence will be critical.

Practical guidance for directors and company officers

Directors should obtain advice before personally paying a company’s judgment debt.

A personal payment may not convert the company’s liability into a personal debt. It also does not automatically create a right to contribution or subrogation against the company. If the company is insolvent, the payment may raise additional issues involving other creditors, transactions, directors’ duties and insolvency law.

The payment should be documented clearly. The parties should record whether it is:

• A payment made as agent for the company;
• A loan to the company;
• A contribution towards a settlement;
• A payment under a personal guarantee; or
• A personal payment made to protect an asset or avoid immediate enforcement.

Without clear documentation, disputes may arise about whether the company’s debt was discharged and whether the director can recover the money.

What if the company is in liquidation?

If a company is in compulsory liquidation, a creditor may need the court’s permission before commencing or continuing proceedings against it.

Section 130(2) of the Insolvency Act 1986 generally requires leave to sue a company after a winding-up order has been made. The decision in Glencore Energy UK Ltd v Prax Lindsey Oil Refinery Ltd illustrates that leave may be granted where the creditor has a seriously arguable proprietary, fraud-related or tracing claim and separate proceedings are fair and appropriate.

The position will depend on the nature of the claim and the stage of the liquidation. A creditor should take advice promptly rather than issuing proceedings without considering the insolvency restrictions. The High Court judgment in Glencore provides further detail.

How long does enforcement take?

There is no fixed timetable. Enforcement may take weeks, months or longer depending on:

• Whether the debtor has identifiable assets;
• Whether the debtor challenges the enforcement;
• The type of enforcement procedure;
• Court listing times;
• The existence of mortgages or competing creditors;
• Whether a property must be marketed and sold; and
• Whether the debtor or company enters insolvency.

A charging order may secure a creditor’s position relatively quickly, but an order for sale and the eventual realisation of funds can take considerably longer.

Early advice from civil litigation solicitors can help creditors select a proportionate enforcement route and avoid spending money on a remedy that is unlikely to produce a recovery.

Frequently asked questions

What is a charging order?

A charging order secures a judgment debt against an asset, usually property or land owned by the debtor. It does not necessarily result in immediate payment or automatically lead to a sale.

Can the County Court order the sale of a debtor’s home?

Yes, the County Court may have jurisdiction to order a sale, including where the property is a home. However, the court must consider the debtor’s circumstances, co-owners, occupiers, proportionality and the available equity. A sale is not automatic.

What is the £350,000 limit?

Following McGowan v Potter, the County Court’s equity jurisdiction permits it to enforce a charging order by sale where the amount owed does not exceed £350,000. The figure concerns jurisdiction, not the court’s discretion to grant the order.

Does a director paying the debt clear the company’s judgment?

Not automatically. Under 56 Fellows Road, a director’s personal payment does not necessarily discharge the company’s judgment debt. The payment must be properly made on behalf of the company or otherwise authorised and effective.

Can I enforce against a director personally?

Not merely because the director controls the company or has made a payment. Personal enforcement normally requires a separate legal basis, such as a guarantee or a claim arising from specific misconduct or insolvency-related circumstances.

How long does enforcement take?

The timetable depends on the enforcement method, the debtor’s assets, any challenge, court delays, insolvency issues and whether property needs to be sold. There is no universal timeframe.

Related Posts

• Bailiff reforms and recent judgment-enforcement developments
• The Commercial Payments Bill 2026: what businesses need to know

If you need help enforcing a judgment debt, contact Tyndel Solicitors through our Debt Recovery service or Civil Litigation service. We can advise on charging orders, orders for sale, enforcement against companies and the most proportionate next step.