Second Circuit Limits Pre-Judgment Asset Freezes In Contract Cases

Plaintiffs in commercial disputes often face a troubling issue: no matter how strong their case may be on the merits, will there be assets available to collect? As the saying goes, an uncollectable judgment is not worth the paper it is printed on. What if it appears that the defendant does not have sufficient assets to pay a likely judgment or — even worse — that the defendant is liquidating and dissipating assets? Can the plaintiff obtain a temporary restraining order to freeze the defendant’s assets and stop a liquidation/dissipation?

The U.S. Court of Appeals for the Second Circuit recently answered this question in the negative, holding that, absent some security interest in specific assets, a plaintiff suing for money damages from a contract breach is not entitled to an injunction freezing defendants’ assets. In Leadenhall Capital Partners LLP v. Advantage Capital Holdings LLC, No. 24-2647 (2d Cir. Mar. 23, 2026), the plaintiffs, lenders under a loan and security agreement,