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115 Banking L.J. 1077 (1998)
Prejudgment Relief for Creditors

handle is hein.journals/blj115 and id is 1075 raw text is: BANKRUPTCY FOR BANKERS
Several years ago, the Federal Deposit Insurance Corporation, as receiver for
the failed Aurora Bank, filed a lawsuit in a federal district court in Colorado
against Aaron Mosko and a number of other individuals alleging that they
had participated in a scheme to defraud the bank. While that lawsuit was
pending, the FDIC became concerned that Mosko was transferring most of
his assets to relatives and others and would not be able to pay the judgment
that it expected to obtain against him. Without notifying Mosko in advance,
the FDIC asked the district court for a temporary restraining order freezing
his assets.
Relying on Colorado law,1 the district court granted the temporary
restraining order and then, after a hearing, a preliminary injunction ordering
that all defendants-including Mosko-refrain from transferring, selling,
assigning, dissipating, concealing, encumbering, impaitring or otherwise dis-
posing of their assets, unless for normal business and living expenses of
less than $5,000, without prior notice to the FDIC. Significantly, the injunc-
tion applied broadly to all assets of the defendants, including those not
directly traceable to the defendants' allegedly fraudulent activities.2
Courts have long ruled that they may restrict a debtor's ability to transfer
property that is the subject of a lawsuit or freeze assets when those assets
are the subject matter in dispute.3 For example, a lender that is foreclosing
1 See COCCA § 18-17-106(6).
2 Federal Deposit Ins. Corp. v. Antonio, 649 F. Supp. 1352 (D. Colo. 1986), aff'd, 843 F2d 1311 (10th
Cir. 1988).
3 See, e.g., Republic of Philippines v. Marcos, 806 F2d 344 (2d Cir. 1986).
Neil H. Ackerman is a Member of Ackerman & Terry, LLC, in Wesibury, New York. He regu-
larly represents creditors in bankruptcy cases and out-of-court restructurings.


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