LIFTING A DEFAULT AND UNFREEZING A COMPANY BANK ACCOUNT
We were successful today in unfreezing a company’s bank account and halting collection activities against them.
A frozen bank account often comes on like a bolt out of the blue. If a debt collector or Plaintiff’s lawyer starts a case with a bad address the entire case can proceed without the Defendant knowing anything abou it. One a complaint is filed and bad service is represented as good the case can proceed through a default motion, the entering of a default judgment onto collection actions where information subpoenas that are blasted out to all the dozen or so big commercial banks reveal the location of bank accounts which are suddenly frozen by a restraining notice. Suddenly, like that, a company cannot do business and the account is being drained.
We recently confronted a situation like that and were successful in having the bank accounts unfrozen, that collection activities cease against the company defendant and that the Plaintiff hold in escrow any monies already taken from the company.
An application like this is brought on by an Order to Show Cause. Since there is “interim” relief being sought, immediate unfreezing of bank accounts, it is necessary to show the Court that you put the Plaintiff on notice of the application you would be bringing.
In the Plaintiff business, a funding company, only did business with an individual and his sole proprietorship, but when they sue, they sloppily sued a LLC with the same name. A completely different entity that they had never done business with. CPLR 5015(a)(1) controls the application to lift a default, and a movant needs to show a reasonable excuse for non appearance and a meritorious defense to the action in the first place.