ENGLAND & WALES Law and Practice Contributed by: James Herring, Nathalie Allen and David Wigg, Addleshaw Goddard
Contempt of Court A creditor may be able to instigate contempt of court proceedings for failure to comply with a judgment or court order (often considered, for example, where there has been a breach of an injunction). In this regard, the applicant can, for example, seek an order to send an individual to prison for contempt of court (or, in the case of a company, the application can be made against the company’s directors). Taking such action is usually viewed as a remedy of last resort where there is a history of disobedience of court orders in ongoing proceedings. Freezing Order As discussed in 1.1 Options to Identify Another Party’s Asset Position and 2.1 Types of Domestic Judgments , a judgment creditor may be able to apply to the court for an order freezing the judgment debt - or’s assets pending enforcement. This is to avoid the debtor’s assets being dissipated (and can be used only where it can be shown that there is a risk of dis - sipation). 2.3 Costs and Time Taken to Enforce Domestic Judgments The typical costs involved and the length of time for enforcement will vary depending on the complexity of the case. Applying for an interim charging order, attachment of earnings or enforcement by taking con - trol of goods should – in theory – be straightforward and can usually be achieved in a relatively cost-effec - tive manner. Any challenge to the method of enforcement naturally increases the time and expense. This is particularly the case in relation to seeking an order for sale once the judgment creditor has obtained a charging order. A charging order may help safeguard the asset in ques - tion (and is therefore worth considering), but to sell the asset the judgment creditor will need to apply for an order of sale. These applications are often hotly disputed, particularly if the asset is a family home, or where there is limited equity in the property or where the property is jointly owned. It is important to note that insolvency proceedings require a professional person to be appointed (a trus -
a liquidator, again to collect and distribute the judg - ment debtor’s assets. A judgment creditor may be able to apply for an administration order in relation to a company. This is an unusual step but could be appropriate if the debtor is a trading business with limited tangible assets and its ability to repay the judgment debt is therefore reli - ant on the continuation of the business. Administra - tion is a regime aimed at business rescue, in order to achieve the best outcome for a company’s creditors. If there is any suspicion that the debtor has moved or sold any of its assets to avoid paying the judgment debt, it is important to consider insolvency proceed - ings as part of the enforcement strategy. Insolvency practitioners have powers to investigate and apply to the court to reverse certain transactions entered into by a debtor prior to its insolvency. The rules for such claims differ depending on the circum - stances of each case, but there are typically time limits for such claims, so early assessment of the benefits of this strategy is very important. In certain circumstances, individuals and companies may be able to benefit from short statutory morato - riums on enforcement, where their position may be improved by the granting of a short period of time in which to organise their affairs. Advice should be taken in relation to relevant procedures if considering insolvency proceedings. Appointment of a Receiver A judgment creditor may be able to apply to court for the appointment of a receiver over the judgment debtor’s assets. This option is usually only available as a last resort when it is not possible to enforce the judgment by a more normal route. This method of enforcement could potentially be useful in relation to, for example, companies with specific valuable assets such as real estate or IP. However, the assets of debt - ors in financial difficulty are usually subject to security in favour of other parties, so it is often difficult to take control of such assets. An application to appoint a receiver can be made without notice to the judgment debtor but must be supported by evidence.
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