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Preserving Assets for Judgment Creditors: A Cayman Islands Perspective
In a move to protect the value of any potential judgment against a defendant, a Cayman Islands court has granted an order freezing all assets held by or on behalf of the defendant. This proprietary injunction is designed to preserve the practical value of any future judgment and prevent the dissipation of assets that could otherwise render the judgment worthless.
The Importance of Early Action
By taking early action to identify and preserve assets, claimants can protect their interests and ensure that any future judgment is enforceable and effective. The court’s decision highlights the importance of this approach in asset recovery strategies.
Worldwide Reach
While the freezing order has worldwide application, its effectiveness depends on the jurisdictions in which the defendant is found to have assets that may be enforced against. Claimants seeking to secure assets across multiple jurisdictions will need to consider whether each jurisdiction would give effect to a worldwide freezing order.
Alternative Enforcement Options
In addition to injunctive relief, claimants have alternative enforcement options available to them:
- Appointment of a receiver
- Garnishee (third-party debt) orders
- Charging orders and orders for sale
Each option has its own benefits and drawbacks, and the choice of which to pursue will depend on the specific circumstances of the case.
Gathering Evidence
In some cases, claimants may need to gather evidence from third parties who are not otherwise involved in the dispute. A Norwich pharmacal order may be sought against such third parties before or after the claimant has obtained judgment. This can provide valuable information about the defendant’s assets and help claimants to identify and preserve those assets.
Liquidation
In extreme cases, a claimant may need to seek the winding up of a company. This can be done on the basis that the company is insolvent or for reasons of justice and equity. While the principal function of liquidators is to collect in the assets of the company and distribute them to those entitled, they also have wide-ranging information gathering powers.
Conclusion
The Cayman Islands’ legal system offers a range of measures by which claimants may identify and preserve assets to be applied in satisfaction of judgment against a defendant. By evaluating enforcement options early on, claimants can develop an efficient and effective litigation strategy that protects their interests and ensures the enforceability of any future judgment.
With the exception of liquidation, the asset identification and preservation measures available in the Cayman Islands can be used independently or in combination with one another. The best approach will depend on the specific circumstances of the case and should be determined through coordinated efforts with advice from legal counsel in all relevant jurisdictions and experienced asset recovery professionals.