As a result of the large amount of risk which enterprises especially SME’s face, the EU has catered for the introduction of assistance to creditors providing the possibility of freezing funds in bank accounts located in other Member States, resulting in the facilitation of the collection of debt when either the debtor or his financial assets are located in a different EU State.
The Commission’s aim in taking up the initiative of introducing this procedure is to bring forward a streamlined approach in order to provide assistance when a credit risk and the element of cross border debt is present. The incentive was regarded as a measure which was similarly initiated in relation to warrants which became an integrative part of national legal systems including Malta.
The incentive may be used upon verification of the evidence of existence of a credit risk which is real that is, where funds due and owing to the creditor are at a serious risk of being unrecoverable. Following the presentation of evidence, a European Account Preservation Order shall be issued against the debtor, without any prior notification, regardless of the account’s location provided that it is located in the territory of a Member State.
This measure additionally provides for a remedy for claims brought forward by the creditor of which the debtor proves to be unfounded. In this event, the creditor will be bound to pay all the costs of procedure for the preservation of funds in the account. The debtor will also have the additional remedy of claiming any damages which he have suffered as a result of such an action.
This remedy is solely a method of preserving the funds in the account and does not guarantee the delivery of funds to the creditor. In order for this to occur a judgement delivered by a national court according to national legislation and or any other equivalent remedy implemented by the EU itself must be effected.
The procedure is similar to that provided under local legislation where banks shall freeze the amount due to the creditor in the bank account; depending on this the bank will issue a statement on whether sufficient funds are available in the debtor’s account to cover the debt.
The level of assistance provided by this mechanism is complementary to the debt collecting procedures available under local legislation since such fund recovery method may only be availed of in the event of the existence of cross-border credit risk.
As a result of the large amount of risk which enterprises especially SME’s face, the EU has catered for the introduction of assistance to creditors providing the possibility of freezing funds in bank accounts located in other Member States, resulting in the facilitation of the collection of debt when either the debtor or his financial assets are located in a different EU State.
The Commission’s aim in taking up the initiative of introducing this procedure is to bring forward a streamlined approach in order to provide assistance when a credit risk and the element of cross border debt is present. The incentive was regarded as a measure which was similarly initiated in relation to warrants which became an integrative part of national legal systems including Malta.
The incentive may be used upon verification of the evidence of existence of a credit risk which is real that is, where funds due and owing to the creditor are at a serious risk of being unrecoverable. Following the presentation of evidence, a European Account Preservation Order shall be issued against the debtor, without any prior notification, regardless of the account’s location provided that it is located in the territory of a Member State.
This measure additionally provides for a remedy for claims brought forward by the creditor of which the debtor proves to be unfounded. In this event, the creditor will be bound to pay all the costs of procedure for the preservation of funds in the account. The debtor will also have the additional remedy of claiming any damages which he have suffered as a result of such an action.
This remedy is solely a method of preserving the funds in the account and does not guarantee the delivery of funds to the creditor. In order for this to occur a judgement delivered by a national court according to national legislation and or any other equivalent remedy implemented by the EU itself must be effected.
The procedure is similar to that provided under local legislation where banks shall freeze the amount due to the creditor in the bank account; depending on this the bank will issue a statement on whether sufficient funds are available in the debtor’s account to cover the debt.
The level of assistance provided by this mechanism is complementary to the debt collecting procedures available under local legislation since such fund recovery method may only be availed of in the event of the existence of cross-border credit risk.