How Asset Tracing and Distraint Work in Enforcement
Tracing a debtor's assets and placing a distraint on them is among the most effective instruments of compulsory enforcement — it is here that it is decided whether the creditor's claim is satisfied in real value. This stage of Georgian enforcement procedure is regulated in detail by the Law on Enforcement Procedure — specifically its Articles 40, 44, 47, 48, 50, 54 and 56. On this page we explain how a distraint is placed on movable property, what is recorded in the act of description and distraint, how property is valued, how the auction proceeds and how the priority of multiple creditors is determined — and where our involvement can be decisive.
The Placing of a Distraint and Its Subject
As defined by Article 40 of the Law, placing a distraint on movable property means the description of the debtor's property, the declaration of a prohibition on the owner's disposal of it — alienation, pledging, or the conclusion of lease and rental contracts — and/or the transfer of the property for safekeeping. The enforcement officer records the distrained items in the act of description and distraint, and a transaction concluded after the distraint is void. Distrained money is deposited by the officer without delay into the respective deposit account, while securities and valuables are kept in a specially designated, secured room.
As to the subject of the distraint, Article 44 of the Law states that all items of the debtor are subject to distraint except the exceptions established by the Law, and it is presumed that items found with the debtor belong to him. If a third party claims a right to the property, the item is nevertheless entered in the act with an appropriate note, and the enforcement officer must explain to that person the right to apply to the court — a moment of particular importance where the case concerns assets moved abroad and ownership is often disputed.