It is always worth the Applicant considering whether there are other alternative remedies that could be sought from the court which are less time consuming, costly and potentially risky. Such remedies include for example
An order preserving properties or securing a specific fund.
These orders are commonly granted in situations where there is a dispute as to a party’s entitlement to the property or fund in question. The Court will take into account in any such application whether (I) there is a serious issue to be tried; and (ii) the balance of convenience favours making an order. In the circumstances the grounds upon which such Orders are granted are slightly different to Freezing Order as there is no requirement to show a real risk of dissipation, although the balance of convenience will often be swayed by demonstrating that there is in fact such a risk. If an Applicant considers that he can rely on the cooperation of the party currently holding funds, he can simply apply for an order as opposed to a Freezing Order relating to the funds. This type of application is probably the cheapest and most low key alternative to a Freezing Order and indeed, the order can be granted by a Master (a lower grade of High Court Judge) or even in the County Court. One downside however, is that such a remedy does not give the Applicant the same level of protection as a Freezing Order, which carries a penal notice and puts the Respondent at risk of imprisonment for failure to comply with the order (a risk which makes the Freezing Order more effective).
Appointment of a Receiver to hold assets of the Respondent
An injured party can seek the appointment of a Receiver to hold assets of the wrongdoer. This is done so pursuant to Section 37 of the Senior Courts Act, although a Receiver will only be appointed in support of a Freezing Order where the Order is insufficient on its own and where there is a measurable risk that the Defendant will act in breach of the Order.
A Receiver can be appointed over both companies and individuals.
An injured party can seek what is known as a Proprietary Order. This is a type of Order which attaches to a specific asset or assets rather than a Respondent’s assets in general. It will only be granted in circumstances in which the Applicant is able to make out an arguable claim that it has some beneficial interest in the asset in question. Whilst often described as Freezing Orders, they are not in fact Freezing Orders. The test applied by the Court is different to that which is required in Freezing Order scenarios. There is no requirement in a Proprietary Order to show that there is a real risk of dissipation of assets.
Indeed, where a claim is purely proprietary (i.e. there is no monetary claim) the Applicant should always give careful consideration to seek a Proprietary Order as opposed to a general Freezing Order as the Court is actually likely to refuse an application for the latter.
Furthermore, a Proprietary Order can be granted by the County Court as opposed to only in the High Court.
The appointment of a provisional liquidator.
This is probably the most unusual and dramatic remedy available to an Applicant. It is made pursuant to Section 135 of the Insolvency Act 1986 in respect of a company. It is an adjunct to winding up proceedings. An order appointing a provisional liquidator may be made in circumstances in which pending the hearing of the winding up petition there is a significant risk that the Respondent’s assets will be dissipated and or that it will continue some fraudulent trading activity or that its books and records will be destroyed. It is a very serious application indeed, as the appointment of a provisional liquidator over a company is very likely to have a terminal effect on the company’s trading life. A creditor in making an application must show that firstly he is likely to obtain a Winding-Up Order on the hearing of a Petition and secondly, in all circumstances it is right that a provisional liquidator be appointed.
A provisional liquidator must also be proposed to the Court, which is normally an accountant-qualified Insolvency Practitioner. This appointment serves only to protect the assets until the company is wound-up and does not always provide security for any assets in the short-term.
It is rare for creditors to seek such appointments, as the benefit of the appointment of a provisional liquidator lies with all creditors (and the Applicant’s claim will be treated equally against any assets recovered net of the fees of the subsequently appointed liquidator).
European Account Preservation Order
An Applicant may also consider the possibility of a European Account Preservation Order (“EAPO”). This is a new type of regime produced by the European Commission to enable a Court in one EU member state to make an Order freezing the bank account of a Defendant in a different EU member state.
Accordingly, this option only remains available between EU member states and may not apply to all European countries and is not available outside of Europe. There are also some limitations on the type of claim that may support an EAPO, it being only relevant to monetary claims.
The EAPO can only be used to freeze bank accounts and cannot be used against any other assets which the Applicant may be aware of. Equally, the rights of an overseas bank to set-off sums against account balances (for example where it operates more than one account in the Defendant’s name, it may set off an overdrawn account against the account subject to the EAPO).
Delivery up orders
These are Orders available under the Civil Procedure Rules 1998 (as amended) PD 25A, which allows the Court to require that specified items are provided requiring delivery-up of such assets.
A Delivery-Up Order may be made where Orders are simultaneously being executed at the Defendant’s premises (for example Freezing Orders) and may be ancillary to the main order obtained.
The Court must include all such ancillary orders as part of a Delivery-Up Order for the protection of third parties, including the Applicant. Such ancillary orders may relate to the manner of execution, the physical safeguard of assets and strict adherence to the terms of the order. Such an Order may also require a cross-undertaking by the Applicant.
These are Orders normally sought against property of the Defendant once judgement has been obtained. They are very useful for circumstances where lengthy proceedings have led to obtaining judgement but the Defendant refuses to pay the judgement liability (often by reason of an inability to pay the debt).
A Charging Order will normally be relatively straightforward to obtain if judgement has been granted in your favour and no steps have been taken to appeal or revoke the judgement (an appeal must be filed within 21 days).
In such the Applicant should consider a Charging Order against any known property assets as soon as possible. The expediency of dealing with this is vital, as one common tactic often employed is to register a charge against a property to eliminate any equity (and thus make the effectiveness of a Charging Order pointless).