Business Law

Business Law News 2015, Issue 3

ORAP Liens And Bankruptcy Law: Protecting The Interests Of Judgment Creditors With Secret Liens

Michael Gomez

Michael Gomez focuses his practice in the areas of bankruptcy, restructuring, debtor and creditor rights, commercial litigation, and business litigation. He has represented various entities, including debtors, creditors’ committees, hedge funds, indenture trustees, equipment lessors, receivers, landlords, bankruptcy trustees, and institutional lenders in out of court workouts, federal and state court litigation, and chapters 7, 11, and 13 bankruptcy cases.

I. Introduction To ORAP Liens: What They Are And What They Can Do

Attorneys facing judgment collection encounter various complicated and sometimes daunting procedural challenges when advocating for their clients. One important example under California law is the "secret" lien that attaches upon service of an order to appear for examination on a judgment debtor. Service of the order to appear creates what is called an ORAP lien (because it’s based on an "ORder to APpear") on all of the debtor’s nonexempt personal property, whether or not such property is described in the notice of the examination with sufficient detail to be reasonably identifiable.1

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