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A New Weapon for Creditors in Europe
Executive Summary of an article written by
Jeff Klazen, Andrew Stafford, Rebecca Hume, D. Farrington Yates and James P. Booth, Kobre & Kim LLP
Certain claimants and judgment creditors domiciled in 26 European Union member states enjoy access to a new weapon against evasive debtors. Under Regulation (EU) No 655/2014, they can apply for a European Account Preservation Order (EAPO) to freeze a debtor’s bank accounts across Europe. The regulation simplifies cross-border asset preservation by introducing a standardized application process, backed by automatic recognition across the 26 member states to which the regulation applies.
An EAPO prevents dissipation of a specified amount of money from a debtor’s bank accounts, pending the enforcement of an achieved or likely judgment. The nationality and domicile of the debtor does not matter: The EAPO affects the bank account itself. EAPOs can freeze funds in bank accounts in the debtor’s name or — to the extent possible under domestic law — held on the debtor’s behalf. All EAPO member states automatically recognize the EAPO. An applicant may apply once to freeze funds held in accounts across the member states.
The EAPO has the potential to save certain creditors time, effort and costs; but it is far from a perfect solution. The measure is likely to prove a blunt instrument for cases involving low account balances or assets concentrated in a small number of jurisdictions. Therefore, creditors should always give careful consideration as to whether the EAPO is the best tool for the job, and seek advice as to whether deployment of domestic measures is more appropriate in their circumstances.Read the full article at:
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