A practical guide for businesses: bank account garnishment, attachment in enforcement and precautionary attachment, distribution of proceeds and creditor priorities.
In debt recovery, the difference between holding an enforceable title and actually recovering the money is often procedural. Starting enforcement is not enough: you must choose the appropriate measure, avoid errors that may lead to challenges and understand competing creditor claims and distribution. Starting first does not always mean being paid first.
This article is intended for business-to-business cases, with a focus on practical steps and frequently encountered risks.
1. Garnishment: a means of securing payment, particularly through bank accounts
Under Romanian law, garnishment concerns money, securities or other intangible movable assets owed to the debtor or held on the debtor’s behalf by a third party. It may also cover amounts payable in the future where the underlying legal relationship already exists.
For businesses, bank account garnishment is particularly relevant. It may cover both credit balances and future receipts, subject to statutory limits, including protection for certain types of income.
Important exclusions include earmarked funds, non-repayable grants or project funding and temporary protection for amounts allocated to future salary payments, for three months from the first garnishment of the account.
2. Garnishment without a prior demand for payment
For the creditor, an important feature is that garnishment is established without a prior demand for payment. It is based on the order authorising enforcement and effected by a notice served on the garnishee, usually the bank, with the debtor being informed. The notice prohibits payment to the debtor to the extent needed to satisfy the enforceable obligation.
In a properly prepared case, account garnishment may quickly freeze funds. This is often the point at which the debtor begins negotiations concerning full payment, instalments or settlement.
3. Freezing the funds: the principal effect
Funds are frozen when the garnishment notice is served on the garnishee. The garnishee may no longer make payments or carry out transactions that reduce the frozen assets until the obligation is fully discharged, including during a suspension of enforcement by garnishment.
The freezing effect also extends to amounts falling due successively, including future amounts, and to civil fruits and ancillary amounts. Payment or assignment of the attached debt after garnishment has been established cannot be relied on against the attaching creditor. Subsequent disposals by the debtor of attached assets are likewise ineffective against that creditor.
An important procedural option is that the freezing measure may cease if the debtor deposits the garnished amount, specifically earmarked and held at the enforcement officer’s disposal.
For foreign-currency debts, the law expressly permits credit institutions to convert the amounts into lei or the currency specified in the title, as appropriate, at the National Bank of Romania exchange rate, without the account holder’s consent, for deposit or enforcement purposes.
4. Attachment in enforcement and precautionary attachment
Attachment of movable property after enforcement has begun
If the debtor does not pay within one day after service of the demand for payment accompanied by the order authorising enforcement, the enforcement officer proceeds to attach the debtor’s seizable movable property for sale, including property held by a third party. Where there is an evident risk of removal, the court may order attachment at the time the demand is served, on the creditor’s request included in the enforcement application.
For commercial creditors, this measure may be relevant where the debtor is reducing its stock or equipment, or where accounts are repeatedly empty but the business has movable assets that can be sold.
Precautionary attachment before obtaining an enforceable title or during proceedings
Precautionary attachment is intended to preserve the debtor’s assets where the creditor does not yet have an enforceable title. A creditor with a written, due claim may apply on proof that court proceedings have been brought; the court may require security. Where the claim is not evidenced in writing, attachment may still be requested, subject to security of half the amount claimed.
The application is heard urgently in chambers, without the parties being summoned, and determined by an enforceable order. The order is subject only to appeal within five days of service.
In practice, precautionary attachment may provide protection where there are indications that the debtor is hiding or dissipating assets or seeking to avoid enforcement.
5. Distribution priorities: why you may not be paid first
Actual recovery depends both on the amount realised and on its distribution. If there is a single creditor, the proceeds are released to that creditor after enforcement costs are deducted.
Where several creditors pursue enforcement, or other creditors intervene before distribution, the enforcement officer applies the statutory order of priority. This starts with litigation and enforcement costs and expenses incurred in the creditors’ common interest, continues with protected categories such as salary-related and maintenance claims, and includes tax claims, state loans, bank lending, supplies, services, works, rent, fines and other claims. Claims ranking equally are paid proportionately.
The position of secured creditors is particularly important. Creditors holding a validly preserved pledge, mortgage or other priority right over the asset sold may be paid ahead of the categories specified by law, including salary claims under Article 867 of the Code of Civil Procedure. The applicable priorities and expenses must be checked for the particular distribution.
Compliance with the statutory distribution order is a matter of the legality of enforcement. Decisions concerning competing enforcement measures and distribution must be assessed in their particular factual and procedural context.
6. Competing creditors and deadlines for participation
After the sale proceeds are paid or deposited, the enforcement officer urgently sets a ten-day period for filing documents evidencing claims. Once the relevant statutory filing period has expired, creditors can no longer participate in distribution of the enforcement proceeds.
Interested creditors must file the original documents or certified copies and separately identify principal, interest and costs, together with any priority rights not entered in public registers.
Tax claims are subject to a specific mechanism. A creditor may require the state or local authority to declare its preferential claims within the relevant period. Failure to comply with the notification or declaration requirements may result in loss of priority against creditors who requested the declaration.
An often overlooked point in negotiations is that interest payable by the debtor to creditors included in the draft distribution ceases from the date fixed for filing claim documents, even if otherwise agreed. Those creditors are then entitled only to interest paid by the credit institution holding the deposited funds.
7. Bank account garnishment and the competent court
The jurisdiction of the enforcement court must be distinguished from the territorial competence of the enforcement officer. It must not automatically be inferred from the location of the garnishee bank. Article 651 of the Code of Civil Procedure generally refers to the debtor’s domicile or registered office when the enforcement body is seized, subject to statutory exceptions.
For each case, we check when enforcement began, the authorising order, the particular procedural issue and the applicable rules. Decisions in other cases cannot be generalised without examining their context. Correct planning may avoid delays caused by jurisdictional objections and transfers between courts.
8. Enforcement proceeds cannot simply be garnished again
After assets are sold, the proceeds and amounts deposited at the enforcement officer’s disposal cannot be garnished by creditors of the debtor or the purchaser at the enforcement sale. Garnishment may concern only amounts allocated to creditors or the debtor in the distribution record.
This makes timely intervention in the enforcement file important: claim documents should be filed within the applicable period and distribution monitored, rather than attempting later to garnish money already held as enforcement proceeds.
9. Documents that make a difference before enforcement starts
A frequent business problem is the absence of a coherent enforcement file from the pre-litigation stage. Garnishment and attachment can be powerful procedural tools, but their effectiveness depends on the enforceable title and prompt identification of accounts, relevant third parties and assets. Future receipts may be garnished and firm restrictions imposed on the garnishee, but only following proper service and within the amounts pursued.
The following outline may help business planning; it does not replace an individual legal assessment.
| Typical situation | Main measure | Purpose | Key legal provisions |
|---|---|---|---|
| Active debtor with account cash flow | Bank account garnishment | Freezes balances and future receipts | Articles 781 and 783–784 CPC |
| Debtor moving property or selling assets | Enforcement attachment or precautionary attachment | Preserves assets for sale | Articles 732 and 953–954 CPC |
| Several creditors pursuing the same debtor | Prompt intervention and monitoring of distribution | Recovery depends on ranking and deadlines | Articles 865–870 and 867 CPC |
| Security over an asset, such as a pledge or mortgage | Sale and priority ranking | The secured claim may enjoy priority | Article 867 CPC |
10. How we approach business debt recovery
Effective commercial enforcement requires a plan: reviewing the title and risks of challenge, selecting garnishment or attachment, identifying relevant garnishees and managing competing creditors and distribution. Priorities and filing periods may determine the percentage recovered as much as the amount of the debt.
If you hold a commercial claim, the starting point is a review of the documents and available enforcement options, including garnishment, attachment and interim protective measures, followed by a realistic procedural timetable and an asset-tracing strategy.
