What it means
A creditor who sues faces an obvious risk: by the time judgment arrives, the defendant may have moved or spent everything worth having. A writ of attachment answers that risk by placing specified assets under the court's control, usually through a sheriff, a marshal or an instruction served on the debtor's bank.
The assets stay frozen until the case is decided or the order is lifted. Because attachment bites before anything has been proven, courts set a demanding standard.
The creditor generally has to show a strong underlying claim, a genuine risk that assets will be dissipated, and must post a bond that compensates the debtor if the attachment later turns out to have been wrongful. For the business on the receiving end, an attached bank account is an immediate operating crisis rather than a legal inconvenience.
Payroll bounces, supplier payments fail, and lenders very often treat the attachment itself as an event of default under their facility agreements. Attachment is regularly confused with two neighbouring ideas.
Garnishment reaches money that a third party owes the debtor, such as wages or a customer's unpaid invoice, while execution is enforcement after judgment has been entered; attachment is the pre-judgment freeze that keeps an asset available in the meantime. Finance teams need to reflect it properly in the accounts.
A live attachment turns available cash into restricted cash and usually calls for disclosure as a contingency, and auditors will ask about it because an attachment normally signals a dispute large enough to threaten the business.
In practice
Real-world examples.
Example
A commercial landlord obtains an attachment over a tenant's trading account after the tenant is caught transferring cash to an overseas affiliate. The frozen $95,000 becomes the effective settlement fund when the dispute is resolved four months later.
Example
A shipbuilder facing a supplier claim finds its main operating account attached on a Thursday, two days before payroll. Its finance director negotiates a substitute security bond so that the account is released and the business can keep trading while the case proceeds.
Example
A lender discovers that a borrower's receivables have been attached by a third party. The facility agreement treats attachment above $50,000 as an event of default, so the lender suspends further drawings pending a review.
Formula
Calculation
Attachment Coverage = Value of Attached Assets / Amount Claimed
Bond Cost = Required Bond x Surety Premium Rate
A packaging supplier sues a distributor for $250,000 in unpaid invoices and obtains a writ of attachment after showing that the distributor has been moving stock to a related company. The court requires the supplier to post a bond equal to 20% of the claim.
Required Bond = $250,000 x 0.20 = $50,000
Bond Cost at a 3% surety premium = $50,000 x 0.03 = $1,500 a year
The sheriff attaches a bank balance of $180,000 and equipment appraised at $40,000, giving attached assets of $180,000 + $40,000 = $220,000.
Attachment Coverage = $220,000 / $250,000 = 0.88, or 88%
The supplier is therefore secured for 88% of its claim and faces a $250,000 - $220,000 = $30,000 shortfall if it wins in full. It must weigh the $1,500 annual bond cost, plus legal fees, against the risk of recovering nothing at all had the assets been left free to move.Case study
Seen in the real world.
Fenwick Marine Fabrication is an invented business used purely to illustrate the mechanics of attachment. It built steel modules to order, ran on a modest overdraft, and had a long-running quality dispute with a customer over a $410,000 contract.
The customer sued and, having heard that Fenwick was quoting for a management buyout, applied for and obtained a writ of attachment over Fenwick's main bank account. In this illustrative scenario $265,000 was frozen overnight. Payroll failed, two suppliers put the account on hold, and Fenwick's bank invoked a default clause that stopped any further drawings on the overdraft.
Fenwick's response was to post a counter-security bond of $290,000 arranged through a surety at a premium of just under $9,000, which persuaded the court to release the cash while the dispute continued. The fictional case settled fourteen months later for $150,000, well below the claim, but the company's finance director noted that the real cost was the four weeks of operational damage caused before the account was released.
Watch out
Common mistakes.
- Believing attachment means the creditor has been paid. It only preserves assets pending judgment, and the creditor still has to win the case and then enforce.
- Treating attached cash as available cash on the balance sheet. It is restricted, it cannot fund operations, and presenting it as ordinary cash misstates liquidity.
- Ignoring the default clauses in loan agreements. An attachment frequently triggers a lender's event of default, which can turn a manageable dispute into a funding crisis.
Questions
People also ask.
What is the difference between attachment and garnishment?
Attachment freezes assets the debtor holds directly, while garnishment reaches money a third party such as an employer, bank or customer owes to the debtor.
Can an attachment be lifted?
Yes, a debtor can apply to vacate the order or, more commonly, post a substitute bond so the assets are released and the bond stands as security instead.
Who pays if the attachment was wrongful?
The creditor does, through the bond it posted, which is precisely why courts require one before granting a pre-judgment freeze.
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