Written by Attorney Mai Al-Zughaib
Seizure of a Debtor’s Assets in the Enforcement Sense
The seizure of a debtor’s assets in the enforcement sense refers to placing the debtor’s attachable assets — both movable and immovable — under the authority of the Enforcement Directorate, and preventing the debtor from disposing of them through sale, gift, or any other legal transaction without its approval, and after ensuring the settlement of debts, as well as preventing the debtor from concealing them with the intent of harming creditors.
The objectives of seizure are:
- To identify the assets against which enforcement will be carried out from among the seized debtor’s assets.
- To preserve those assets by restricting the debtor’s or others’ powers over them, so that the creditor may ultimately satisfy his right from the proceeds of their sale.
The conditions for enforcement seizure are:
- The existence of an enforcement instrument held by the applicant for seizure, regardless of its type.
- A request by the concerned party to the Enforcement Department to seize the debtor’s assets or part thereof.
- The issuance of a seizure order by the enforcement judge.
- Prior notification of the debtor and requiring him to fulfill his obligation, together with service of a copy of the enforcement instrument upon him and a warning that his assets will be seized if he fails to comply within the notification period.
Types of Enforcement Seizure
The enforcement seizure established under the Enforcement Law is of four types, which differ according to the nature of the asset to be seized — whether it is movable or immovable, whether it is in the debtor’s possession or held by a third party, or whether it relates to the wages and salaries of workers and employees.
Movable assets are assets that are generally circulated through cash, such as currencies, securities, instruments, and financial bonds in banks, and sometimes gold — used for immediate buying and selling. Immovable assets, on the other hand, comprise assets that are not subject to immediate circulation, such as real estate, buildings, and residential and agricultural land.
Seizure of movables held by the debtor applies to movable assets owned by the debtor and in his possession. Seizure of the debtor’s assets held by third parties applies to movable assets belonging to the debtor that are in the possession of a third party, or to rights the debtor holds against such third party.
Seizure of shares, bonds, revenues, and interests is governed by the rules applicable to seizure of movables held by the debtor or seizure of the debtor’s assets held by third parties, depending on the nature of the seized asset. The creditor may also enforce against real property, i.e., seize and then sell it.
The creditor is obligated to follow the appropriate procedure prescribed by law according to the nature of the asset to be seized — whether it is real property or a tangible or intangible movable, and whether it is in the debtor’s possession or held by a third party — failing which the procedures shall be null and void.
Order of Enforcement Against the Debtor’s Assets
In order to protect the debtor, the legislator established an order for enforcement against his assets, stipulating in Article (41) that: “Enforcement shall begin against liquid funds owned by the debtor and against his rights held by third parties; if these are insufficient, seizure shall be carried out against his movable and immovable assets.”
In addition, it is not permissible to seize or take other enforcement measures against public movable or immovable assets belonging to the State, public legal persons, local authorities, or endowment (waqf) assets designated for the performance of their functions. Public assets include all State assets designated for public benefit, whether in fact or pursuant to a law, decree, or Cabinet decision.
Seizure of Immovable Assets
For the seizure of immovable assets, the creditor is required to request the Land Department to register the debtor’s immovable assets in the debtor’s name.
The Land Registration Department shall record the request in a special register, after the creditor submits a certified copy of the judgment or instrument in his possession, along with any other documents or instruments required by the Director of Lands, and upon payment of the applicable fees. An investigation shall be conducted into the transactions of the debtor subject to enforcement in the manner specified in the laws and regulations relating to new registration transactions. Enforcement against these assets shall thereafter proceed in accordance with the procedures set out in the law, and the Enforcement Department shall deduct from the proceeds the expenses incurred by the creditor in the registration transactions and reimburse him accordingly. This is provided for in Article (111) of Enforcement Law No. 23 of 2005.
Furthermore, in seizure of immovable assets, the following must be observed: seizure is not permitted except to the extent of the debt, interest, and costs. For this purpose, the ceiling for seizure of immovable assets is set at twice the value of the debt only; seizure of all immovable assets is not permitted — seizure may only be imposed on immovable assets up to the amount sought.
The authorities that must observe this when imposing seizure in application of the law are:
- The department or institution requesting the seizure, by specifying the value of the debt / the amount sought in its letter requesting seizure, without identifying specific immovable assets to be seized.
- The Land and Survey Department, with which the seizure is executed, by ensuring that the seizure request has specified the value of the debt (the amount sought), and accordingly imposing seizure on immovable assets up to twice the value of the debt only. If the value has not been specified, it must request the seizing authority to specify the value of the debt in the seizure correspondence in order to proceed with the seizure.
Plurality of Creditors or Multiple Seizures on Real Property
The seizure of an asset does not preclude the imposition of further seizures upon it, and subsequent seizures are carried out by the same procedures. However, Article (238) of the Code of Civil and Administrative Procedure regulated such cases and confirmed that, in the event another creditor holding an enforcement instrument with the force of res judicata appears after the seizure order has been registered, the judicial officer shall be required to register him alongside the seizing creditors and obtain an ex parte order including his registration at the Real Estate Registry together with the remaining creditors. From the date of such notation, he becomes a party to the enforcement proceedings, and the cancellation of registrations and notations shall not be permitted except by a contrary order.