Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.
The Facts
Alliance Bond Fund, a creditor of Grupo Mexicano de Desarrollo (GMD), sought a preliminary injunction preventing GMD from transferring or dissipating its assets (specifically toll road notes the company was planning to assign to other creditors) before a money judgment could be obtained. The district court issued the injunction. The Second Circuit affirmed. The Supreme Court granted certiorari to address whether federal equity practice authorized this novel form of prejudgment asset freeze against a general creditor.
The Application
The Court applied its historical equity standard by examining Alliance Bond Fund's status and what remedial interest it possessed. As an unsecured creditor seeking only a money judgment, Alliance Bond Fund had no recognized property interest in GMD's specific assets, the toll road notes GMD planned to transfer were not collateral securing the debt or subject to any lien or constructive trust. Historical English equity practice limited preliminary asset-preservation injunctions to cases where the plaintiff held an equitable interest in specific property, not broad asset freezes to protect a general creditor's position against dissipation risk. Therefore, the district court's injunction exceeded federal equitable authority under the 1789 standard, as no historical precedent supported restraining transfers of unencumbered assets to preserve an unsecured creditor's ability to collect a future judgment.
The Conclusion
**Controlling precedent limiting federal equitable asset-freeze injunctions prior to judgment.** Cited in virtually every major case involving preliminary injunctions, nationwide injunctions, and the scope of federal equitable powers. The Trump v. CASA Inc. (2025) litigation over nationwide injunction authority builds directly on Grupo Mexicano's historical methodology for defining equitable jurisdiction.
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Case Analysis
Overview
Held that federal courts exercising equity jurisdiction cannot issue preliminary injunctions preventing defendants from transferring assets that are not the specific subject of the suit. Limited equitable powers to those historically available in 1789 English courts of equity.
Facts
Alliance Bond Fund, a creditor of Grupo Mexicano de Desarrollo (GMD), sought a preliminary injunction preventing GMD from transferring or dissipating its assets. Specifically toll road notes the company was planning to assign to other creditors. Before a money judgment could be obtained. The district court issued the injunction. The Second Circuit affirmed. The Supreme Court granted certiorari to address whether federal equity practice authorized this novel form of prejudgment asset freeze against a general creditor.
Issue
Whether a federal district court has authority under general equitable principles to issue a preliminary injunction preventing a defendant from transferring assets prior to the entry of a money judgment, where the plaintiff seeks only money damages and has no lien or equitable interest in the specific assets.
Rule
Federal courts sitting in equity exercise only the powers recognized at the founding in English courts of equity. Grupo Mexicano limits preliminary injunctions to preservation of specific assets to which the plaintiff has a recognized equitable interest. Not general creditor restraints on asset transfers. The dissent argued courts of equity always had inherent power to adapt their remedies to achieve justice.
Analysis
The Court applied its historical equity standard by examining Alliance Bond Fund's status and what remedial interest it possessed. As an unsecured creditor seeking only a money judgment, Alliance Bond Fund had no recognized property interest in GMD's specific assets. The toll road notes GMD planned to transfer were not collateral securing the debt or subject to any lien or constructive trust. Historical English equity practice limited preliminary asset-preservation injunctions to cases where the plaintiff held an equitable interest in specific property, not broad asset freezes to protect a general creditor's position against dissipation risk. Therefore, the district court's injunction exceeded federal equitable authority under the 1789 standard, as no historical precedent supported restraining transfers of unencumbered assets to preserve an unsecured creditor's ability to collect a future judgment.
Conclusion
**Controlling precedent limiting federal equitable asset-freeze injunctions prior to judgment.** Cited in virtually every major case involving preliminary injunctions, nationwide injunctions, and the scope of federal equitable powers. The Trump v. CASA Inc. (2025) litigation over nationwide injunction authority builds directly on Grupo Mexicano's historical methodology for defining equitable jurisdiction.
Notes
Landmark originalist equity case. Scalia majority. Establishes the 1789 baseline for federal equitable powers. Central to the modern trend of curtailing equity.
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