Business disputes are a common (if unwelcome) part of operating any commercial enterprise and sometimes parties end up in court. Even if you believe a lawsuit is completely frivolous, attempting to ignore a legal proceeding is never a good idea. Once a judgment is entered, the creditor has a number of tools at its disposal to attempt collection. The most common is the Citation to Discover Assets and its cousin, the Third Party Citation. Served upon the Judgment Debtor – either by serving an officer of the company or by serving its Registered Agent – a Citation carries the full force of law.

What is a Citation? A Citation is a court order directing its target (the Judgment Debtor itself or, with a Third Party Citation, someone doing business with a Judgment Debtor) to halt all transactions involving the Judgment Debtor’s property or assets, disclose all such property or assets, and hold them for the benefit of the Judgment Creditor. Failing to comply with a Citation risks being held in contempt of court and the sanctions available to the Court for findings of contempt are significant,

Who is at Risk? This process is especially perilous for the Registered Agent who, having accepted service of the Citation, faithfully forwarded it to the Judgment Debtor and thought nothing more about it. However, if the Judgment Debtor fails to appear in court and answer the Failin g to Res pond to Court Cit ati on or Summons Can Land You in Jail Citation, the Registered Agent, having accepted service on behalf of the Judgment Debtor, will be held responsible for the Judgment Debtor’s failure to appear. A judge can then issue a Rule to Show Cause why the Registered Agent should not be held in contempt of court…or even a Writ of Body Attachment, which would require a Sheriff to arrest the Registered Agent and hold them in jail until the Citation has been resolved. Similarly, a customer or vendor of the Judgment Debtor served with a Third Party Citation must comply or risk a contempt finding and sanctions.

What Should You Do? These dire consequences can be avoided by responding timely and appropriately. Having competent counsel at your side, whether you are a Judgment Debtor or a Registered Agent, will help you navigate treacherous waters.