Freezing Injunctions

A High Court decision provides a stark reminder to businesses of the importance of otaining legal advice on the effect of court orders. A shareholder and a director of a company were each found to be in contempt of court after a freezing injunction over the company’s assets was breached. Although sentencing was adjourned, the judge expressly stated that imprisonment was an option in this case.

The respondents were found to have taken steps to transfer the company’s entire business to their new company. They had known that these steps were in breach of the injunction and that they were done with the intention of interfering with it.

The judgment also provides useful clarification of the duties of company officers when the company’s assets are subject to an injunction. In particular, it confirms that someone who is not party to an order may be found liable for contempt only if it is shown that he intended to interfere with or impede the administration of justice.

Click here for more information about freezing injunctions.