Regulatory risk & compliance

Freezing injunctions

If you think a fraud has been committed and want to make sure the fraudster does not remove the stolen monies from your reach, or if you are making a court claim and are concerned assets will be removed to prevent you getting them when you win your case, a freezing injunction might be the answer. A freezing injunction is an order that prevents someone from disposing of or dealing with assets. The purpose of the injunction is to preserve those assets until a final judgment can be obtained to be enforced against those assets.

Freezing injunctions and contempt: Templeton v Motorcare

A shareholder and director of a company have each been sent to prison for contempt of court after a freezing injunction over the company's assets was breached: 9 months for the director and 2 months for the shareholder. They set up a phoenix company to evade enforcement of a judgment but this case shows how the courts view schemes like that. These types of injunction are powerful and, as these individuals found out, not to be messed with.

What is an injunction?

An injunction is a court order which prohibits a person from taking a particular action (prohibitory injunctions) or requires them to undertake a particular action (mandatory injunctions). An injunction can be either final or interim. An interim injunction is a provisional measure which is taken at an early stage in proceedings, by either a defendant or claimant, before trial, and before any final decision on the merits of either side’s case. A final injunction continues after the end of proceedings and is granted to last continuously or until a specified date after which protection is no longer required.

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