ArticleMay, 2005

Can You Freeze Assets in a Fraudulent Conveyance Action After Grupo Mexicano?

by Irve J. Goldman
American Bankruptcy Institute Journal

In Grupo Mexicano de Desarrollo v. Alliance Bond Fund Inc.,the U.S. Supreme Court held that in a contract action for money damages where no equitable relief is sought and no interest in the defendant's assets is claimed, a district court lacks authority to issue a preliminary injunction freezing a defendant's assets before a judgment is entered. Bankruptcy and Creditors' Rights attorney Irve Goldman states that since Grupo Mexicano, however, most courts have not found it to be legal impediment to granting an asset-freeze injunction in cases where the plaintiff's underlying action makes a claim to assets in a defendants' possession or seeks equitable relief, such as the imposition of a constructive trust.3

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