Our experience certifies that certain dishonest debtors try to dissipate their property, transfer funds to third parties or take other steps aimed at reducing value of their assets instead of fairly meeting payment obligations. In such cases it is essential to prevent a debtor from dissipating assets and the law provides creditors with such opportunity.
We prepare necessary court documentation needed to apply for seizure of debtor’s assets as a provisional protection measure. The chances in succeeding with the application will grow if the court documents are drafted by professional lawyers.
On the other hand, we also act on behalf of defendants, when it is necessary to challenge the existing freezing order or the claimant's application to impose a freezing order. Under certain circumstances, it is possible to claim for damages when assets were frozen without a good reason.
Knowledge & Insights
The seizure of a property (so-called "Freezing order" or "Seizure Order") is the most popular court interim measure in Lithuania. This means that defendant's rights to dispose his or her property (or some components of that right - the right to manage, use or dispose that property) will be temporarily restricted. The freezing order can be made when it is necessary to ensure that the decision of a court would be actually enforced. Upon request of a person involved in the case, the court may adopt a freezing order provided that it is feasible that without such freezing order the enforcement of the anticipated court ruling may become complicated or impossible to enforce. Lithuanian courts maintain the view (the case law is not fully consistent though) that large claim infers a greater risk that the court decision may not be enforced.
By comparison, the freezing order can be obtained in Lithuania somewhat easier than in Western European countries. It is not necessary for a claimant to perform a separate investigation on the defendant's capability to satisfy the claim. The freezing order can be imposed if a defendant fails to provide prima facie evidence that it has sufficient funds to enforce the court ruling.
Assets to be seized
Usually the immovable property is seized first and only if the value of such immovable property is insufficient to cover the claim, the movables and/or cash accounts or receivables are seized. The court is not obligated to seize property that is used in everyday's life of a debtor to satisfy the most essential needs, like household items, things needed for the professional activity, etc. The seizure order can also be imposed in the course of enforcement of a court ruling. Some type of receivables may not,however, be seized at all (like unemployment benefits, social disbursements, etc.).
Lithuania does not have special civil procedure rules on leaving funds for defendant's legal fees. Defendant's lawyers are not privileged and would be treated similarly as the other creditors of a defendant.
Assessment of facts
In resolving the issue of the application of the freezing order, the court must also determine whether in this particular case it is likely that there is some real risk that the future court ruling will not be enforced if no seizure of assets is applied. The court normally makes a preliminary assessment of the claim and evidence available for court's review at that point. The purpose of such assessment is to make sure that the court’s decision in favour of the claimant may in fact be passed in the future, after the case is considered by the court in detail.
As a rule, the matter of applying the seizure of assets should be considered at court by hearing the pleadings of both parties, particularly whether the freezing order is necessary in the handing the particular case. However, in case there is a risk that that after becoming aware of the upcoming court hearing the defendant may transfer the whole or a part of its property to third parties, the court may impose a freezing order without informing the defendant. In such cases, after the court ruling regarding seizure of assets is applied the defendant shall have the right to appeal against this ruling.
Šulija Partners Law Firm Vilnius, registered office Jogailos street 11, Vilnius, LT-01116, Lithuania, fax +370 52051926, e-mail: info@SulijaPartners.com
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