Financial challenges are a constant in the business world. They become particularly evident when customers who have borrowed money default on their repayments. Financial institutions, however, have a powerful legal tool at their disposal to address this problem—the writ of attachment. California Code of Civil Procedure 483.010 allows commercial lenders to establish a judicial lien on a debtor’s assets in California at the start of a legal proceeding. The purpose is to preserve assets to ensure they are available for collection after the litigation concludes in favor of the lender.
Determining Eligibility
The initial step in pursuing a writ of attachment is establishing whether the lender’s claim qualifies. There are four requirements. (1) The claim must be monetary, arising from an express or implied contract. (2) The amount must be $500 or more, excluding additional costs, interest, and attorney fees. (3) The claim is unsecured or only secured by personal property. This includes fixtures and is commercial. (4) The claim against an individual must be related to their trade, business, or profession.
Identifying Attachable Assets
Once eligibility is confirmed, lenders must identify which assets can be attached. These assets must also be located within California. The procedure varies depending on whether the debtor is a business entity or an individual. For business debtors, precisely identifying assets at the application stage is not required. However, the lender must provide detailed information to the Marshal or Sheriff after they have been attached. However, the process is stricter for individuals who have debts. The lender must identify specific non-exempt properties eligible for attachment during the application stage.
Preparing for the Attachment Hearing
The next phase is to prepare the necessary documents and devise a strategy for the attachment hearing. This includes assembling paperwork and deciding whether to seek immediate relief through a prehearing application or to schedule a standard hearing. When your attorney asks for immediate relief, the lender must demonstrate substantial harm if the attachment or a temporary protective order is not issued promptly. The lender carries the burden of proof at the attachment hearing, needing to satisfy the four key criteria mentioned earlier.
Navigating the intricacies of a writ of attachment in business litigation demands diligence and strategic planning. The attachment procedure can expedite settlements and secure assets despite the initial costs. It can serve as an effective solution for lenders dealing with defaulting borrowers. Ensuring compliance with the statutory requirements and making informed decisions at each step of the process is crucial.
Foldenauer Law Group
We understand the challenges financial institutions face during business litigation, and we are ready to assist in leveraging writs of attachment to secure your financial interests. With our extensive knowledge and practical experience, we can guide you through the process. Contact us today to schedule a consultation.