UK steers clear of insolvency cul-de-sac
Relieved to see the Government has announced its decision (October 31) to opt out of the proposed European Account Preservation Orders.
These would have been a sort of cross-border, ‘mini-freezing Order’, and it was generally felt they would be far too easy to obtain.
Our native Freezing Order (in its previous incarnation, the Mareva injunction) was once referred to by a judge as a “nuclear option”; such an Order could topple even a healthy business into insolvency. So it’s obvious that the use of such Orders needs to be accompanied by substantial safeguards. For example, in England & Wales, the Applicant will be made to compensate the Respondent if a wrongly obtained freezing Order causes damage to its business.
There were insufficient safeguards built in to the EAPO provisions, so it’s good to see they won’t be affecting British businesses until the necessary improvements are imposed.
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