The District Court of Limassol recently decided on an application to vary a freezing order, which had already been made absolute, seeking the release of shares for the purposes of corporate restructuring and raising additional capital.
The Court repeated that, pursuant to section 32(2) of Law 14/60, it has a broad discretion to vary an interim order where “reasonable cause” is established. That discretion, however, does not provide a party with a second chance to revisit matters that have already been determined, unless there has been a material change in circumstances or new evidence has emerged.
The main issue was the sufficiency of the evidence. The Court found that the allegations concerning the necessity of the proposed transaction, remained unsubstantiated and theoretical. A claim of commercial necessity solely is not sufficient, without concrete supporting evidence.
The Court also considered whether the proposed transaction fell within the applicant’s ordinary course of business. It noted that, according to English case law , a transaction falling outside the ordinary course of business may nevertheless justify a variation of a freezing order, provided that the variation does not undermine the purpose of the order, namely, the preservation of assets to ensure the effective enforcement of a potential future judgment.
In the circumstances, the Court found that the proposed restructuring would create uncertainty as to the monitoring and effective preservation of the assets. The undertakings proposed were considered insufficient, while the application itself was found to be premature. Ultimately the Court dismissed the Application stating that the variation would not be in the interests of justice.
Our office acted for the Respondents and the case was handled by Mr S. Pittas and Mr A. Mavrommatis.
For further information on this topic please contact
Mr. Alexandros Mavrommatis( amavrommatis@pittaslegal.com ) at SOTERIS PITTAS & CO LLC,
by telephone (+357 25 028460) or by fax (+357 25 028461)
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