By the injunction issued on 4 March 2022, the Constanta District Court has admitted the application that we filed and ordered the defendant (buyer) to refrain from transferring the acquired shares, until the main litigation for setting aside the initial sale to the buyer of the respective shares would be settled.
When fraudulent transfers of shares or even immovable assets take place, time is of the essence. That is because the risk of the buyer to retransfer such shares is impending, and then a bona fide subsequent buyer would bar the creditor’s possibility to ask that such shares be restituted to the initial seller.
In the case at hand, the selling of the shares occurred while the creditor had frozen the initial seller’s assets. Consequently, the creditor file a court case asking that the sale be set aside, in particular as the parties were father and son. To prevent a subsequent transfer of the shares to third parties, we also filed for the creditor an application asking for an injunction to be issued against the buyer to prohibit further sales.
The Constanta District Court issued the injunction and embraced the arguments we put forward. As such, the court held that all the legal requirements prescribed by Article 997 of the Civil Procedure Code were met:
a) Prima facie validity of the arguments: the claimant proved that on 4 June 2021 the assets of the debtor were frozen and at that date, the debtor (seller) stated that no rights over his shares exist in favor of other parties. In this context, the arguments of the applicant are valid prima facie “given that from the evidence submitted, the certified date of the sale-purchase agreement, signed on 2 June 2021, is 7 June 2021, namely during 4 June 2021 and 11 June 2021, and thus the applicant has an interest for the injunction to be issued”.
b) Urgent matter: “results from the rather easy way by which the defendant (…) may transfer (…) the shares, while such transfer is likely to harm the applicant”. In this context, the Court held that the injunction is necessary and admissible as “the temporary restraining of the right to re-transfer the shares represents an obligation of the debtor to refrain from certain actions, namely to refrain from transferring again the shares acquired according to the assignment agreement dated 2 June 2021”.
This interpretation of urgent matter is identical to another recent interpretation that we have already written about in a separate article, concerning the notion of necessary measure in the matter of asset freeze. More specifically, this notion prescribed by Article 973 para. 1 of the Civil Procedure Code is to be interpreted as the measure is necessary whenever an asset transfer could damage the claimant and render ineffective the main case, while evidence of the defendant’s actual intention to tamper with the assets is not necessary.
c) No trial on the merits: with respect to this condition, the Court held that “following the summary review of the evidence, the court is not analyzing the elements that may render the contract for the transfer of the shares null and void (…), but rather rule on preliminary specific aspects regarding the temporary prohibition of the defendant (…) to transfer (…) the shares acquired from his son”
d) Temporary measure: with respect to the final condition, the Court held that the measure “has a temporary feature, namely until a ruling will be issued in the case (…) having as subject matter the nullity of the share transfer agreement”.
With regards to the above, the court ordered the defendant to refrain from transferring the acquired shares, until the main litigation for setting aside the initial sale to the buyer of the respective shares would be settled.