Your account is restrained and payroll is due
Why your account was frozen
When a funder has a judgment, its lawyer can serve a restraining notice on your bank under CPLR 5222. No judge signs it first. The bank may then hold up to twice the amount of the judgment, which can empty an operating account and stop payroll.
How long a restraint lasts
A restraining notice generally stays in effect for one year and can be served again. A marshal or sheriff can also levy the funds and turn them over. Waiting for the funder to call back rarely helps.
How we get the money moving again
- Attack the judgment itself. Many MCA judgments come from confessions of judgment with defects on the record.
- Ask for emergency relief. A court can stay enforcement or limit it through a protective order (CPLR 5240), often by order to show cause.
- Check the notice. When the account belongs to an individual, CPLR 5222-a requires exemption notices and claim forms. Missing forms can be a ground for relief.
- Negotiate a release. Sometimes the fastest path is an agreement that frees the account while the dispute continues. See settlement and restructuring.
If several funders are involved and the business cannot recover, bankruptcy and its automatic stay may be an option to consider.
Frequently asked questions
Can my bank freeze my account without a court order?
Yes. A judgment creditor's lawyer can serve a restraining notice on the bank without a judge reviewing it first. Relief comes from asking a court to vacate the judgment or limit enforcement.
How much can the bank hold?
Under CPLR 5222(b), up to twice the amount due on the judgment.