If your business is owed a debt and you’re concerned that your debtor or debtor company can sell or dispose of assets rather than pay what is due, they may apply to the court for a freezing order. However, you must understand that the Courts do not grant these lightly, of course, as they interfere with the basic right of any individual or company to sell their assets as they see fit.
A freezing order (formerly known as Mareva injunctions) is an interim measure granted by a court to prevent a person from being able to dispose of or deal with their assets before a judgment has been enforced.
Almost any asset, including company bank accounts, property, land, investments, and shares, can be frozen under the freezing order.
The freezing order will not prevent the corporation or individual from borrowing money, and if they do so after the order is issued, the borrowed funds will not be considered an asset.
When a freezing order is granted by the court it is endorsed with a penal notice in case a respondent does not comply, it will be contempt of court and face a fine.
These forms will be best prepared with support from a legal advisor.
A draft Order – which will set out the terms for the freezing Order.
Ancillary Orders (only sometimes needed) – this may include an order for cross-examination, delivery of passport, or order for a company receiver.
If it is determined that the freezing order should not have been granted, the applicant must provide full disclosure of all relevant material as well as an undertaking in damages to pay the respondent. The applicant may be asked to furnish security in specific instances.
To allow the court to properly use its discretion, the applicant must submit all facts and information to the court. These facts include everything that could harm the applicant’s case, the length of the dispute, and facts that the applicant or their counsel were unaware of but could have learned if they made reasonable inquiries.
In most cases, freezing orders are given for a period of 7 to 14 days. The court will reconvene once the order has expired to decide whether to extend, discharge, or continue the order until the trial.
Applicants for a freezing order should be aware that the process might take a long time, both in terms of legal fees and the time required of firm employees. Third-party costs, such as those incurred by banks, may also be borne by applicants.
Because they are secured before a trial, the applicant should be aware that injunctions are only given if the applicant agrees to a cross-undertaking in damages, which means they will reimburse the defendant for any losses if the injunction is found to have been obtained incorrectly.
As a result, legal fees may be substantial, and they rank as the most major potential disadvantage of taking this course of action.
Shergroup is a leading enforcement agency based out in the UK. We also have a legal company by the name of Sherwins Ltd that looks into the legal aspects of enforcement and our other services from our client’s perspective.
We have been actively supporting businesses, government organisations and individuals with high-quality legal advice.
Our prosecutors are proficient at advising on prospective methods and at finding the evidence required to prove a fraud conviction, as well as ensuring that whatever evidence is provided is admissible in any later criminal trials. Hiring Shergroup’s legal team that comprises experienced solicitors will provide you with a first-class and comprehensive legal service to help you get justice.
So, whether you need to get a freezing order against your debtor or you to want a piece of legal advice about your case or want us to enforce your court order, feel free to get in touch with us. We’d be glad to help you through it.
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Last updated | 19 July 2023
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