Articles Tagged with Bonds

Unlike some jurisdictions, the state courts in New York and New Jersey, as well as the federal courts, do not require a losing party who has a monetary judgment entered against them, to satisfy (pay) the judgment or post an appellate bond to secure the payment of the judgment in order to take an appeal. On the other hand, however, taking an appeal does not automatically prevent the judgment creditor from undertaking enforcement procedures to collect on the judgment.

With the exception of certain parties, such as governmental entities and insurance companies, a judgment debtor (the party who owes the money) can only stay (stop) enforcement proceedings to collect on a monetary judgment against them by posting an appellate bond for the full amount of the judgment. To obtain the appellate bond, sureties (the insurance company issuing the bond) will generally require that the judgment debtor post collateral, such as a totally liquid bank account or letter of credit, for 125-150% of the amount of the judgment. That is because the amount of the appellate bond must be sufficient to secure the judgment as well as accruing interest, which can run as high as 9% per year for New York State court judgments (press here to see our related article on judgment interest). The surety will also charge a premium, typically 1-2% of the bonded amount, as their fee.

If the judgment is affirmed (upheld) on appeal, the surety will be obligated to satisfy the judgment by paying the judgment creditor the total amount due plus interest and fees. The surety will use the collateral to pay that. If the judgment is reversed (overturned) on appeal, a court order will likely be required to terminate the bond and have the collateral returned.