This Year's Winter Froze not only the Streets but also the Debtors' Accounts
Regulation (EU) No 655/2014 dated 15 May 2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters applies from 18 January 2017. The Regulation is a new step towards a better payment discipline enabling creditors to block debtor’s accounts opened anywhere in the EU without the debtor's prior knowledge thus preventing the debtor to transfer funds to another state.
In order to obtain the European Account Preservation Order (hereinafter: the Preservation Order), the creditor must substantiate his claim and prove the risk of the transfer of assets. In case the creditor requests the issuance of the Preservation Order before obtaining an instrument permitting enforcement, he will have to prove that he is likely to succeed on the basis of his claim against the debtor. In the event that the creditor has not yet obtained an instrument permitting enforcement, the court requires providing a security deposit to compensate for any damage suffered by the debtor if the Preservation Order is subsequently revoked or its execution terminated for reasons attributed to the creditor.
Based on the Preservation Order, the court freezes the debtor's accounts without the debtor's prior knowledge. The debtor has the possibility to contest the Preservation Order only after the account has been blocked.
The Preservation Order issued in one Member State is recognised in other Member States, without any special procedure being required and is enforceable in other Member States without the need for a declaration of enforceability. When the creditor obtains the Preservation Order, the court sends it to the banks in the Member States where the debtor has an open bank account. The bank blocks the account or preserves part of the funds on the account while the remaining funds remain available to the debtor. The creditor must obtain final instruments permitting enforcement (in accordance with the national legislation) if he wants to be repaid from the debtor's funds.