Registry Trust and TrustOnline offer an ‘early warning sign’

Registry Trust, the non-profit organisation which maintains the Register of Judgments, Orders, and Fines for the UK and Ireland and runs the website TrustOnline where anyone can carry out a search of the Register, offers a range of services to organisations from credit reference agencies, law firms and insurers, to academic institutions and think tanks as part of its mission to provide ‘public data for the public good’ on monetary judgments.

Its ‘Special Request’ service provides details of individuals and organisations on the Register to enable firms to identify potential customers at a time when they may need debt management advice and services. Each record contains the defendant’s name and address, the date of judgment and the amount of the award and, where available, the court name and case number. The Trust does not hold telephone numbers, e-mail addresses, data concerning the nature of the case or the name of the claimant. Selections are made by postal area and clients can choose either consumer, corporate, or noncorporate (small-medium businesses) categories. These datasets can then be tailored by record value and there is the option to take the data files daily or weekly. This service has been used by many insolvency practitioners and debt management firms in the past and now new data analysis from Registry Trust highlights why it is so useful, especially in the current climate.

The analysis compares commercial CCJ data from the Register of Judgments, Orders and Fines to commercial insolvency data from The Gazette(2).

Of the 79 businesses that became insolvent in May and June 2021, 47% also appeared on the Register, which means they had received a commercial CCJ in the past six years which was still outstanding (either because it had not been paid or had been paid but not formally ‘satisfied’).

Of those that appeared in both datasets, 22% of companies eventually became insolvent after getting just one CCJ and 78% of them became insolvent within 999 days.

The higher the value of the first CCJ received by these companies, the fewer the number of days until they became insolvent.

With the Insolvency Service’s latest corporate insolvency figures for August 2021 showing a 71.1% increase compared to August 2020(1), this insight could help to identify ‘early warning signs’ for the increasing number of companies facing collapse in the wake of the Covid-19 pandemic.

This would support the Insolvency Service’s new five-year strategy which includes: “a new approach, through education and guidance, to support directors to help prevent insolvency and to learn from the experience of a business failure.”

Registry Trust data analyst Millie Corless says: “The unfortunate reality of having an
outstanding commercial CCJ on our Register is reduced access to credit and borrowing, which can be detrimental to a business’ survival. I wanted to find out if a commercial CCJ is an early indicator of insolvency so that this information could be used to offer targeted support to businesses that are at risk. These new findings will hopefully mean that debt management and insolvency firms can make contact with potentially vulnerable companies at an earlier stage to help them try and avoid insolvency.”

Registry Trust CEO Lex Jones adds: “Our data provides a live indicator of indebtedness for both firms and consumers in the UK and Ireland and contains a wealth of information that can be used to inform policymaking, responsible lending and borrowing, and good business decisions.

“The economic recovery from the Covid- 19 pandemic is going to be dependent on up-to-the-minute insight into how businesses, especially smaller companies which are more susceptible to financial decline if they cannot access affordable credit in challenging times, are faring so that the necessary measures and interventions can be put in place.

“Educating businesses and consumers on how to deal with, and in particular how to
‘satisfy’, CCJs so that they do not hamper their ability to do business effectively is vital. The fact that they may be at risk of insolvency should make this a business priority.”

• (1) According to The Insolvency Service, corporate insolvencies increased by 22.9% to 1,348 in August 2021 compared to July’s figure of 1,097, and increased by 71.1% compared to August 2020’s figure of 788.
• (2) The Gazette provides the official public record of important statutory and nonstatutory notices.