Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.

No. 98-231, 527 U.S. 308 (1999)
Argued March 31, 1999 - Decided June 17, 1999
Justice Scalia delivered the opinion of the Court

Court Composition

Case Facts

Investment funds purchased unsecured notes from Grupo Mexicano de Desarrollo (GMD). After GMD missed an interest payment, the funds sought a preliminary injunction to prevent asset transfers, claiming GMD was at risk of insolvency.

Key Holding

The Supreme Court reversed the lower court's decision, ruling that the District Court lacked the authority to issue a preliminary injunction preventing the disposal of assets before a final judgment.

Main Reasoning

  1. Historically, courts of equity required a judgment fixing the debt before interfering with a debtor's property
  2. The merger of law and equity did not change this substantive right
  3. Creating such a pre-judgment remedy should be left to Congress

Outcome

The case was reversed and remanded, with a 5-4 decision against the preliminary injunction. This decision significantly limited federal courts' equitable powers to freeze assets before judgment in debt collection cases.

Legal Significance

This case establishes important limitations on federal courts' equitable jurisdiction and pre-judgment remedies, emphasizing the historical boundaries between legal and equitable relief in the American judicial system.