Developments in Attachment and Execution Law, and Tips for Limiting Resulting Risk

In-house counsel, boards, and insurers have long been averse to the risks associated with extended litigation. However, despite a company’s best efforts to avoid litigation, due to recent developments in the law of prejudgment attachment and post-judgment execution in New York, companies that transact business with, or hold property of other companies may be easily dragged into litigation in New York state courts by their counterparty’s creditors, forcing them to incur unexpected legal and business costs. In addition, companies may be faced with difficult choices where an aggressive creditor of one of its counterparties demands that it turn over assets of that counterparty, while simultaneously, the counterparty encourages the company to resist such efforts.

This article will first survey developments in the New York law of attachment in light of a line of pathbreaking cases—Koehler v. Bank of Bermuda, Hotel 71 Mezz Lender v. Falor, and Doubet v. Trustees of Columbia University in the City of New York. Doubet last month became the first appellate division decision to apply Koehler and Hotel 71 to restrain assets of a garnishee solely because that garnishee was subject to jurisdiction in New York.¹ Second, this article will recommend specific actions a company may take to avoid the costs and burdens that accompany prejudgment attachment orders and post-judgment executions issued in New York.

Expansive Reach of Attachment Power