Winning a business lawsuit in New York does not automatically put money in your account. A judgment is only the starting point. What follows is a separate legal process, governed by CPLR Article 52, that determines whether and how a judgment creditor actually gets paid. A New York commercial litigation attorney can help a business use these tools effectively, or, if you are on the losing end, understand your options for challenging or managing the judgment. Here is what happens after a business lawsuit judgment is entered in New York.
What Happens Immediately After a Judgment Is Entered?
A judgment becomes official once the court clerk signs and files it. From that point, the winning party (the judgment creditor) can serve the losing party (the judgment debtor) with notice of entry, which starts the clock on the debtor’s right to appeal. Interest begins accruing immediately. For most business and commercial judgments in New York, the statutory rate is 9% per year under CPLR 5004, a flat rate that does not depend on market conditions. Judgments involving individual consumer debt are subject to a different, lower rate, but that exception generally does not apply to business-to-business disputes.
How Do You Collect on a Business Judgment in New York?
New York does not collect judgments automatically. The judgment creditor must take affirmative steps, and the available tools depend on what the debtor owns and where those assets are located.
- Information subpoenas allow a creditor to demand sworn written answers from the debtor or from banks and other third parties regarding the debtor’s income, accounts, and property.
- Restraining notices freeze funds a bank or other third party is holding for the debtor, preventing the money from moving while collection is pursued.
- Income executions (wage garnishments) direct a portion of the debtor’s earnings toward the judgment.
- Bank levies and property executions authorize a sheriff or city marshal to seize funds or non-exempt business assets, including equipment, inventory, or accounts receivable.
- Judgment liens arise when a transcript of judgment is filed with the county clerk, attaching to any real property the debtor owns in that county and complicating a future sale or refinance.
Choosing the right combination of tools usually starts with locating the debtor’s assets, since none of these mechanisms work without knowing where to point them.
What If the Business Debtor Tries to Hide Assets?
Some judgment debtors respond to a business lawsuit loss by moving money or property out of reach. New York’s Debtor and Creditor Law allows a creditor to challenge these transfers as fraudulent conveyances if they were made for little or no value while a debt was outstanding. Courts can unwind the transfer and reach the property to satisfy the judgment.
Creditors can also depose the debtor under oath, request a turnover proceeding to recover improperly transferred assets, or, in cases involving closely held companies, ask a court to pierce the corporate veil and hold individual owners personally responsible.
Can a Business Lawsuit Judgment Be Appealed or Paused?
A losing party is not without options. Post-trial motions, such as a motion to set aside the verdict or amend the judgment, must generally be filed within a short window after entry. A formal appeal challenges legal errors made at trial and requires a timely notice of appeal. Filing an appeal does not automatically stop collection, however.
To pause enforcement while the appeal is pending, the debtor typically needs to post an undertaking, or bond, which guarantees payment if the appeal fails. Debtors may also negotiate a structured settlement or payment plan directly with the creditor, which can be a faster and less expensive path than pursuing further litigation on the judgment.
How Long Does a Judgment Creditor Have to Collect?
New York gives judgment creditors a long runway. A money judgment is generally enforceable for 20 years. A lien against real property created by filing a transcript of judgment lasts 10 years and can be renewed for another 10. That said, waiting rarely helps a creditor. The longer collection is delayed, the more opportunity a debtor has to move or dissipate assets, so most businesses are better served by acting promptly once a judgment is in hand.
Whether you are trying to collect on a judgment or determining your next move after losing one, the post-judgment phase of a business lawsuit has its own deadlines and procedural rules. Contact Levy Goldenberg LLP to discuss the options available in your matter.