Provisional Seizure: Understanding Asset Protection

To obtain provisional seizure in New York, a plaintiff must satisfy several statutory requirements established under CPLR § 6201. The plaintiff must demonstrate that the defendant is a non-resident of New York, or that the defendant has committed or is about to commit a fraud, or that the defendant has removed or is about to remove property from New York with intent to defraud creditors. Additionally, the plaintiff must show that there is a reasonable likelihood of success on the merits of the underlying claim. Courts require clear and convincing evidence before authorizing provisional seizure, as this remedy significantly restricts a defendant's property rights. The burden on the plaintiff is substantial, reflecting the serious nature of asset freezing orders.

Provisional seizure can attach various types of property, including bank accounts, real property, personal property, and business interests. New York courts have determined that provisional seizure applies to tangible and intangible assets that can be identified and located. Real property, securities, inventory, equipment, and accounts receivable commonly become subjects of provisional seizure orders. However, certain property categories receive protection under exemption statutes that shield essential assets from creditor claims. Understanding which assets remain vulnerable to provisional seizure and which enjoy statutory protection is crucial for defendants facing attachment proceedings.

Plaintiffs seeking provisional seizure typically file a motion with the court, including detailed affidavits supporting the grounds for seizure. Many provisional seizure applications proceed ex parte, meaning the defendant does not receive advance notice before the court issues an order. This ex parte procedure exists because advance notice would defeat the purpose of provisional seizure, as defendants could immediately transfer or hide assets. Courts must balance the creditor's need for quick action against the defendant's constitutional right to due process. After the provisional seizure order issues, defendants receive prompt notice and can request a hearing to challenge the seizure.

Once a provisional seizure order is issued, the defendant receives formal notice of the attachment and the grounds upon which the court authorized it. Defendants have the right to request a hearing within a specified timeframe to contest the seizure and present evidence opposing continued attachment. At this hearing, defendants can argue that the plaintiff failed to meet statutory requirements, that the seizure was improper, or that the underlying claim lacks merit. The defendant can also present evidence of hardship or request modification of the seizure to preserve essential assets. New York courts take seriously the defendant's right to challenge provisional seizure and will modify or dissolve orders when the plaintiff's evidence proves insufficient.

Non-residency of the defendant constitutes one primary ground for provisional seizure under CPLR § 6201. If a defendant resides outside New York, courts may authorize seizure of in-state assets to ensure the plaintiff can satisfy any judgment obtained. Fraudulent conduct by the defendant provides another ground for provisional seizure authorization. Courts define fraud broadly to include situations where defendants obtained credit through misrepresentation or engaged in deceptive business practices. Additionally, courts may authorize provisional seizure when evidence demonstrates the defendant intends to remove assets from New York or dissipate property to avoid creditor claims. Each ground requires specific factual support beyond mere speculation.

New York law protects certain property from provisional seizure through exemption statutes that shield essential assets from creditor claims. Homestead exemptions protect a primary residence up to specified dollar amounts from attachment proceedings. Personal property exemptions shield household furnishings, clothing, and other necessities of life from seizure. Retirement accounts and certain pension benefits receive statutory protection from creditor claims in most circumstances. Wages receive partial protection, with limits on how much employers can garnish for debt collection. These exemptions reflect New York's policy of protecting debtors' ability to maintain basic living standards despite outstanding obligations.

Defendants facing provisional seizure orders can often obtain relief by posting a bond in an amount specified by the court. The bond serves as security for the plaintiff, protecting the creditor's interests while allowing the defendant to regain access to seized assets. Courts determine bond amounts based on the potential judgment value and the plaintiff's likelihood of prevailing on the underlying claim. Defendants can request bond reductions if the initial amount creates undue hardship or exceeds reasonable security needs. Additionally, defendants can seek dissolution of provisional seizure orders by demonstrating that the plaintiff failed to meet statutory requirements or that changed circumstances no longer justify asset freezing.

Provisional seizure orders frequently accelerate settlement negotiations by creating immediate pressure on defendants to resolve underlying disputes. The inconvenience and business disruption caused by frozen assets motivates defendants to seek negotiated resolutions rather than prolonged litigation. Creditors gain negotiating leverage from provisional seizure orders, knowing defendants face continued asset restrictions until disputes are resolved. Settlements reached during provisional seizure proceedings typically include release of seized assets in exchange for payment or other consideration satisfying the creditor's claims. Courts generally encourage settlements in provisional seizure cases, recognizing that negotiated resolutions serve parties' interests better than protracted litigation.