Sealing and Sequestration of Debtor's Property

Introduction: The Legal Essence of Sealing and Sequestration

The sealing and sequestration of a debtor's property (transferring it to a third party for management and preservation) represents an extreme and highly effective measure in the forced enforcement process for maintaining the physical integrity of the property and protecting it from tampering. Merely placing an attachment on the property is often not enough to ensure its safety. Unscrupulous debtors might damage, hide, or destroy attached property, thereby destroying the creditor's chance to recover the debt. In such cases, sealing is used, which means physically locking the property (e.g., a warehouse, office, machinery) and securing it with an official enforcement seal. Sequestration goes even further—it implies revoking the debtor's right to manage and store the property (usually an operating business, income-generating real estate, or disputed item) and transferring it to a specially appointed impartial person (a sequestrator). The sequestrator's goal is to maintain the property's value and manage it to protect the creditor's interests during the dispute period.

What this Comprehensive Service Includes

The service of property sealing and sequestration covers specific legal and factual measures. The service begins with the creditor's advocate submitting a substantiated motion to the enforcer, proving a real threat of the property's destruction or concealment. If the request is granted, lawyers are present on-site during the inventory, sealing, and the process of appointing a guard. In the case of sequestration, the service includes selecting a manager with appropriate qualifications (sequestrator), legally executing their appointment, and monitoring their activities. The lawyer oversees that the sequestrator properly maintains the property, collects rent or business income, accounts for expenses, and directs the generated profits to the enforcement bureau's account to cover the creditor's debt.

Common Practical Scenarios

In practice, sealing and sequestration are primarily used during large commercial disputes, enterprise bankruptcies, and inheritance conflicts. A typical scenario is when a dispute surrounds an operating hotel, shopping center, or factory. If the debtor manages this facility and squanders the income for their own benefit, the creditor requests the sequestration of the property. An independent manager is appointed who takes over the reins of the business, pays staff salaries, pays taxes, and saves the net profit for the creditor. Another scenario involves warehouses and shops: when there is a risk of selling the goods and hiding the money, the enforcer directly places a seal on the warehouse doors, which halts the business operations until the debt is paid off or the property is sold at auction.

Georgian Legislation and Rules of Sequestration

The Civil Code of Georgia and the Law on Enforcement Proceedings clearly regulate the rules for sealing and sequestration. According to the legislation, breaking the seal of sealed property, damaging it, or arbitrarily entering the premises constitutes a criminal offense punishable by strict sanctions. As for sequestration, the law establishes that a third, neutral party, as well as one of the parties to the dispute (for example, the creditor themselves), can be appointed as the property manager (sequestrator), provided there is consent from the enforcement body. The sequestrator is accountable to the enforcer; they are liable for any damage or depreciation of the property if it occurred due to their culpable action. The sequestrator has the right to demand reimbursement for incurred expenses and an appropriate fee, which is covered by the income generated from the property.

Procedural Stages of Sealing and Sequestration

The process begins by substantiating an urgent necessity, as sealing and sequestration restrict property rights quite intensively. The enforcer and the creditor's representative go to the facility. If sealing takes place, a property inventory act is drawn up, entrances are locked, and a special enforcement seal-sticker with an official stamp and signatures is applied. If sequestration takes place, a management transfer act is drawn up. The sequestrator receives the property, keys, and documentation, and begins managing it. They are obliged to maintain detailed financial accounting and periodically submit reports to the enforcer. The property remains under the sequestration regime until the debt is fully paid, or the disputed property is finally realized at auction, after which the management right is transferred to the new owner.

Challenges, Risks, and Manager's Liability

One of the main challenges in the sequestration process is selecting a competent and honest manager. Unqualified management can lead to business bankruptcy or property depreciation (for example, in the case of agricultural land—crop destruction), due to which the debtor might sue and demand compensation for damages from the sequestrator or the creditor. A second challenge is physical resistance from the debtor and hindering the sequestrator from entering the facility, which often requires continuous police involvement. Because of these risks, requesting sealing and sequestration must be a very well-thought-out legal strategy executed by an experienced advocate to ensure all procedural rules are protected and counter-lawsuits are precluded.

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