30
Jun
2009

New York — The Creditor's Playground

Law360

 Share  print   Print        Download PDF

PUBLISHED ON: June 30, 2009

This article originally appeared in Anderson Kill's Commercial Litigation Advisor (Spring 2009).

The New York Court of Appeals, which is the highest court in the state, has just issued a holding that may effectively make the courts in New York the collection agency against almost any debtor who does not have all its assets hidden under its mattress. The Court has held that the assets of a judgment debtor which are in the possession of an entity, such as a bank or a brokerage house, that does business in New York, can be executed against through a special type of enforcement proceeding brought in a New York court, whether or not the creditor, the debtor, or the asset itself, has anything to do with the State of New York. Koehler v. The Bank of Bermuda Limited, 2009 WL 1543698, decided June 4, 2009. As long as the bank or other entity in possession of the asset does business in New York — and almost all the major banks in the world do — such a “garnishee,” as the entity holding the asset is called, can be ordered to bring the asset to New York where it can be seized by the creditor.