facebook

How To Freeze A Bank Account During Disputes Among Partners

Business disputes can often get out of hand, mainly because careers and financial incentives are on the line. You don’t want to provide unfair advantages to a party you suspect has broken the company contract or your trust. In that case, an account freezing order can be the best course of action to save your enterprise.

Still, it can be tricky to implement something like that, more so when you’re not associated with a significant government agency like the HMRC. Throughout this piece, you’ll learn how to issue an account freezing order through the court until you reach a partnership dispute resolution.

What Is an Account Freezing Order?

An account freezing order (AFO for short) is a mandate that limits a bank’s ability to service a specific customer or business entity. Usually, it comes under the Proceeds of Crime Act 2002 (Amended by the Criminal Finance Act 2017). The law prevents funds from being used for illicit activities such as international trade in gold bullion, knowingly dumping financial assets in failing ventures, and indulging in the trade of arms, drugs, or other illegal material.

However, you can also freeze a bank account that you suspect can be used as leverage or a source to divert funds. You can put in a request through the court where you’re contesting the matter. Still, it is best to consult with a corporate litigation lawyer before you go ahead with the process.

Steps To Issue an AFO

Any UK court can issue an AFO only when you follow a thorough procedure. You can study it in detail below.

Step 1: Determine that you need an AFO

When applying for an AFO, you must ensure that no third parties could receive harm from its enforcement. Once it’s followed through, no one in charge of the bank account can access the funds, even during emergencies. So, it helps to determine the ownerships, credit lines, and payments out of the account before deciding.
Step 2: Collect the required documents for your case

You must collect all the data required to prove that the bank account was or is still being used for embezzlement or other unsavoury practices. Your case becomes much stronger if you involve it with illegal activities or unauthorised withdrawals. In addition to bank statements, you may also need transactional data to verify your claims.
Step 3: Provide the necessary evidence to the court

Once you have all the evidence, you need to present the evidence in court. You need not wait for the hearing date, as you can include it with other paperwork you submit. Yet, it’s best to submit it separately, as all your evidence shall be present for perusal from the defence as well.
Step 4: Apply for an AFO through the proper channels

You cannot order the court to issue the AFO directly. You must file corporate litigation through HMRC or any other agency by submitting the relevant evidence. In most cases, an enforcement officer will decide to issue it once they receive the judge’s recommendation.
Step 5: Update the order for extension or conclusion

Keep in mind that an AFO will only be valid for a short while. You need to provide proof for further extensions, or else the order shall be lifted, and the account will become operational again.

Validity of an AFO

Typically, a bank account within the jurisdiction of the UK government shall be frozen for at most 7 days. With extensions, the maximum period can be 2 years. Thus, it’s best to come to a partnership dispute resolution before that period, or you risk forfeiting the entire sum to the government.

Final Thoughts

Issuing an AFO for any account is bold and tricky, even when there is a clear cause. That’s why you need an experienced corporate litigation lawyer to walk you through it. Mishoura is a service that can help you procure suitable legal counsel. We can help you connect with someone who makes the procedure as trouble-free as possible.

Looking For A Lawyer?

You agree to receive email communication from us by submitting this form and understand that your contact information will be stored with us.