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English court upholds freezing order, jails directors for refusal to disclose assets

Out-Law News | 28 Jun 2016 | 3:34 pm | 1 min. read

The current and former directors of Hong Kong company Nu Tek have been sentenced to 18 and 12 months' imprisonment for breaching a worldwide freezing order. 

The case demonstrates both the powers of the English court and its refusal to accept attempts to hide assets, said asset recovery expert Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com.

According to details published on Lawtel, the High Court in London found that Nu Tek had made deliberate attempts to avoid complying with a freezing order that had been placed on it following a ruling made in arbitration. That order required the company to disclose details of its assets and for a director to endorse the disclosure in a sworn written testimony.

Nu Tek claimed that its sole director had resigned prior to the arbitration judgment being handed down and been subsequently replaced by a new director. It did not meet the deadline for disclosure.

The High Court said that, with the claimed resignation, Nu Tek had attempted to avoid complying with the terms of the freezing order. The director that the company said had resigned had in fact remained its sole director during the time the freezing order applied and, as chairman and managing director of Nu Tek's parent company, had in any event been in effective control of Nu Tek and served as a shadow director of the company, according to the Lawtel report.

Both directors were sentenced to terms in jail for deliberate breaches of the freezing order.

Sheeley said: "This case demonstrates the power of the English court and that it is a force to be reckoned with. If victims believe that there is any risk of dissipation they should always consider freezing orders as they do work and are enforced to protect the assets."

"All too often proceedings are commenced that result in judgments but ultimately no money is paid because the defendant avoids enforcement and makes themselves judgment proof. It is of paramount importance to be proactive and use all the tools of the English court to ensure effective enforcement of judgments," he said.

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