The County Court backlog and the coming insolvency crunch

The county courts of England and Wales are, by any honest measure, in crisis. The House of Commons Justice Committee described the county court system as “dysfunctional” and suffering from systemic delays and entrenched inefficiency. While the statistics have shown modest recent improvement (the median time for small claims fell to 36.1 weeks in the final quarter of 2025, and for fast, intermediate, and multi-track claims to 57.4 weeks), these figures still represent waits of nine months to over a year for claimants seeking to enforce their legal rights. However, they mask significant regional variation, as London and the South-East have consistently experienced longer waiting times than the rest of the country.

The causes are well known: substantial cuts in spending and staff numbers, followed by slow post-pandemic recovery, have failed to prevent spiralling backlogs and ever-longer delays.

Against this backdrop, a significant change to insolvency procedure has passed largely without public comment and it is one that risks amplifying the pressure on county courts already struggling to cope.

A tenfold shift in jurisdiction

Under the Insolvency (England and Wales) Rules 2016, bankruptcy petitions arising within the London Insolvency District have historically been divided between two courts according to the value of the petition debt: firstly, petitions where the debt is £50,000 or more must be presented to the High Court and secondly, those below £50,000 go to the County Court at Central London.

The Insolvency (England and Wales) (Amendment) Rules 2026 raise that financial limit for presenting bankruptcy petitions in the London Insolvency District from £50,000 to £500,000. In practical terms, this means that a petition debt must now exceed half a million pounds before a creditor can bring it to the High Court (Insolvency and Companies Court). Everything below that threshold, which is the vast majority of London bankruptcy petitions, will instead be routed to the County Court at Central London, without access to HMCTS Ce-File system for issuing petitions or applications and with added complications around paying the Official Receiver’s deposit.

This is not a minor adjustment. The former £50,000 threshold was already widely regarded as modest given London’s cost of living and the typical quantum of commercial debts. The revised pilot practice note confirms this intent: bankruptcy petitions where the petition debt is £500,000 or less, and applications to set aside statutory demands where the debt claimed is £500,000 or less, are now matters for the County Court. This is far from a minor adjustment.

What this means in practice

The London Insolvency District is one of the busiest insolvency jurisdictions in the world, encompassing the areas served by numerous London county court hearing centres. The High Court’s Insolvency and Companies Court has historically handled a significant share of bankruptcy petitions, largely because commercial debts of £50,000 or more are commonplace in a city where business dealings routinely involve such sums.

By raising the jurisdictional threshold tenfold, the amendment will redirect a large tranche of cases away from the Insolvency and Companies Court (ICC), staffed by experienced ICC Judges, and into the County Court at Central London, which is already under considerable pressure.

The County Court already handles personal insolvency matters alongside housing possession, money claims, a broad range of Business & Property work, and company insolvency work transferred from the High Court and other county court hearing centres. It also handles disqualification of directors and unfair prejudice petitions.

Adding a substantial new stream of bankruptcy petitions, many of which will involve meaningful commercial sums to that mix without a corresponding increase in judicial resources will test the court’s capacity severely.

The creditor’s dilemma

For commercial creditors, the implications are significant. Bankruptcy petitions are a key tool in debt recovery, particularly where a statutory demand has gone unsatisfied and negotiations have broken down. The efficacy of the petition as leverage depends substantially on its speed and credibility. A petition that takes many days to issue and many months to be listed for hearing loses much of its force. A debtor who knows that a first hearing is six months away has little immediate incentive to engage.

Under the previous regime, High Court petitions for debts of £50,000 or more benefited from the ICC’s specialist filing and listing infrastructure and, relatively speaking, swifter processing.

Redirecting those same petitions to the County Court risks substantially extending the time from issue to petition presentation to order. In a contested matter where the debtor applies to set aside the petition or raises a genuine dispute, the position is exacerbated as such hearings require proper judicial time and that time is already scarce.

The amendment also has consequences for applications to set aside statutory demands. Where a statutory demand is disputed, prompt court intervention is essential as a debtor has only 18 days to apply. But if those applications are now heard in the County Court at Central London, rather than the ICC, creditors and debtors alike will find themselves navigating a more congested system, with hearings potentially adjourned more frequently and judicial bandwidth spread more thinly.

A structural problem

The threshold change is designed to reserve High Court resource for genuinely high-value or complex insolvency proceedings and to reduce the administrative load on the ICC.

Efficiency measures that shift cases from one part of a strained system to another do not create capacity; they merely redistribute and intensify the problem.

The county courts are not in a position to absorb this additional workload without consequence. The government has pointed to the recruitment of judges and tribunal members, additional sitting days, and the digitisation of processes as signs that reforms are working. Logically, the infrastructure needed to be in place first, especially the digitisation of processes.

There has been genuine, if modest, improvement at the national level. But the specific challenges of insolvency work which requires specialist judicial knowledge, careful case management, and often urgent interim relief mean that generic efficiency gains in money claims processing do not straightforwardly translate into improved insolvency throughput.

Until the county courts receive dedicated resource commensurate with the increased volume of insolvency business being directed their way, commercial creditors should expect slower petition hearings, longer gaps between issue, listing and disposal, and greater uncertainty in enforcement timelines. The £500,000 threshold may be the right policy ambition in the long run. For now, it risks arriving ahead of the infrastructure needed to make it work.

If you have questions or concerns about insolvency, please contact Ben Crowley.