Corporate Talk WA

There are a number of notices that can be served to individuals or companies with overdue debts. It’s important to understand what each one is and how you should respond. Here we outline the notices and their associated penalties. Debt Collection Letters After reminder letters have been sent to you without payment being received, a debt collection letter may follow. Also known as a letter of demand, these will set out the amount owed, what the product or service was and the due date for payment. Late payment interest may be added to the amount owed if the written contract includes a payment of interest clause. The letter may be from an individual, company, their lawyer or debt collection agency. Statement of Claim and Judgement A statement of claim is the beginning of a court case where the plaintiff will outline how much you owe for which goods or services. The plaintiff may also include an amount for interest, filing and service fees and lawyer’s fees. If you ignore a stat...

Reducing costs seems like an obvious tactic to keep a business afloat yet, so few business owners do it properly. For many businesses, staff costs make up the majority of expenses so failing to keep them under control can quickly lead to unavoidable receivership. Reducing these costs, however, is a minefield. Reducing Staff Numbers Australia’s high standard of living and government employment regulations means it is one of the most expensive countries in the world to employ staff. Many small and medium-sized business owners are reluctant to cut staff numbers so they will attempt to reduce other operating costs before staff. Quite often they have a personal relationship with staff and don’t want to hurt them or their families. But some business owners will realise that by cutting a few staff they can save the jobs of many more. If a business can survive the hard times, they can go on to grow and employ more workers in the future. Reducing Pay Conditions Rather than reducing staff ...

Some people make a knee-jerk decision to declare bankruptcy. They think it’s the only way out of a poor financial situation. What many don’t realise is that it’s not just your credit rating that will be impacted by declaring bankrupt, it can affect many areas of your life. Career Choices For many young people who haven’t yet established their careers, they are narrowing their choices by declaring bankrupt. For older workers, they may not be able to continue in their career after bankruptcy leading to more financial pressure. There are numerous Australian professional and trade licensing bodies that don’t allow members to be bankrupts. If you want to run your own small business, there may be limitations placed on you. People who are bankrupt can’t manage a trust account in a real estate or accounting firm, for example. You are also not permitted to hold a liquor licence, building or property management licence. Even if their roles aren’t on your list of preferred jobs, some empl...

A provisional liquidation usually occurs when there is a dispute between the shareholders and directors. One party will file for a provisional liquidation in the interest of preserving the company’s assets. A company may also be placed into provisional liquidation if it is insolvent. A Provisional Liquidator may be appointed by the Court to provide protection to the company’s assets and affairs until a winding up appeal can be heard. Criteria for Appointing a Provisional Liquidator The Court may consider the following points when deciding whether to appoint a provisional liquidator: Are the assets of the company at risk? Is there a need to take urgent action or can the matter wait for the hearing? What is the likelihood that a winding up order will be made? Is there a need for the accounts to be reviewed by an independent examiner? Have the company’s affairs been properly conducted and in line with its legal requirements? What is the need to preserve the status quo? Prote...

The appointment of a receiver is usually the first step in a company’s path to receivership . All of their assets and the parts of or the whole business itself may be sold off to recover debts. Who Does the Appointing? A secured creditor (usually a bank) will apply for the appointment of a receiver so that assets may be sold to repay a debt owed to them. The receiver’s duty is to the secured creditor however they may inform other creditors of their appointment. A receiver must distribute funds in the order required by law and report to ASIC any possible offences or irregularities they have found. They are responsible for gaining market price or the best price possible for assets when liquidating. Role of Receivers and Receiver/Managers Depending on the business, a creditor may appoint a receiver or a receiver manager. A receiver manager is responsible for liquidating assets as well as managing the business. Divisions of a company may be sold off. The powers of a receiver ...

When individuals are in dire financial hardship, it can seem like declaring bankruptcy is the only way out, however, there are other options. A Part X Personal Insolvency Agreement (PIA) may allow for some debts to be written off and for payment terms to be negotiated on the remaining debt. What does a PIA usually include? A Personal Insolvency Agreement can include unsecured debts including: Personal Loans Store Cards Credit Cards Utility Bills Phone and Internet Bills Legal and Accounting Debts Joint debts can be included in the agreement, however, creditors can attempt to reclaim the funds from the other person. Secured debts cannot be included in an agreement including: Mortgages (house is security) Car Loans (where car is security)  Rent to Buy or Hire Purchase (goods held as security) Consequences of a PIA The names of people entering into a PIA appears on the National Personal Insolvency Index permanently and on their credit file for approximately...