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Debt Recovery for Small to Medium Businesses

Debt recovery – All small/medium business owners have been here before – you have taken the time and care to provide your quality goods or services to a customer, and when it comes time for them to pay, you get radio silence or a refusal to pay. Your phone calls, texts and emails with payment reminders and attempts to follow up have been unsuccessful, and now, weeks or months later, you are exhausted and still have a large unpaid invoice, plus all the time and money you have spent on debt collection services. [...]  READ MORE →

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Security for Costs Order

Security for Costs: How to not get dragged down by the impecunious Plaintiff

A successful defendant can often be left with a significant legal bill despite a court ordering the plaintiff to pay their costs of the proceeding – winning the battle but losing the war.

Imagine you find yourself as a defendant in proceedings that you never saw coming and  which should ultimately never have happened. The plaintiff’s claims may lack merit and have very low prospects of success, but they commenced proceedings against you anyway in a desperate attempt to recover money that they lost as a consequence of their own actions. After all of the hours of stress, sleepless nights, phone calls, meetings, and thousands of dollars of legal fees, you and your legal team emerge from litigation victorious, with the plaintiff to pay your costs of the proceeding – only to find out, the plaintiff has no money, no assets and is unable to pay your legal fees. [...]  READ MORE →

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Dotting the I’s, and crossing the T’s – the perils of creditors statutory demands

By Jeffrey Brown a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

The slightest slip of the pen can lead to disastrous consequences when you are dealing with creditors statutory demands, as a recent Supreme Court case demonstrates.

VO Group Australia Pty Limited (“VO”) was making an application to set aside a statutory demand that had been issued on it by Watpac Construction Pty Limited (“Watpac”).  Watpac in turn alleged that the application was made outside the 21 day time limit for making such an application and was invalid. [...]  READ MORE →

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Challenging Demands

By Jacob Reardon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

Section 459G(1) of the Corporations Act 2001 (Cth) (“the Act”) allows a debtor company served with a statutory demand to apply to the Court to have it set aside. Under s 459G(2) any such application must be filed within the 21 day statutory limitation period. This is a strict 21 days and generally cannot be extended.

The operation of s 459G and the strict 21 days limit has led to some controversy in situations where a debtor company has been served with a statutory demand, but does not become aware of the service until after the expiry of the 21 day period. How could it file an application to set aside a demand it did not know about? [...]  READ MORE →

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WHY JUST DO DEBT COLLECTION WHEN YOU CAN HAVE A DEBT COLLECTION LAWYER!

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

With the current economic crisis and the increase in the cost of living, debt collection is also on the rise. We have found that creditors are pursuing debt collection, no matter the quantum of that debt. Creditors are becoming less patient and less lenient with informal debt collection and want to see more formal, efficient and effective debt collection methods, sooner.

Debt collection by commencing proceedings tends to be the last resort in the debt collection process. However, in current times plenty of creditors have decided to skip the first few steps, and jump straight to formal debt collection. There are numerous creditors who are simply taking a much “harder” approach with debt collection and commencing proceedings from the “get go.” This can be an efficient and effective approach to debt collection, but it would be sensible not to apply a “one size fits all” approach to debt collection. Many of a creditor’s debt collection decisions should be made on a case-by-case basis, taking into account the debt collection sum, debt collection fees already incurred, and any known factors regarding the debt or the debtor which will make a particular debt collection method most effective. [...]  READ MORE →

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WINDING UP DEBT COLLECTION!

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Debt collection is winding up as interest rates increase and margins are squeezed.  Generally, creditors want a debt collection process which will recover the maximum amount of any debt for the least amount of work and cost.

Well, what debt collection short cuts are there? When reviewing your debt collection process, what other options exist besides litigation?

Debt collection should not be a “one size, fits all.” When formulating or reviewing your debt collection processes, make sure you understand the advantages and disadvantages of each debt collection avenue and tailor this to particular debt collection situation. A good debt collection system will factor in multiple issues such as the nature and amount of the debt, as well as the circumstances attitude and likely response of the debtor company. A good debt collection system will help you determine which debt collection avenue is appropriate. [...]  READ MORE →

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The Economic Storm – and How To Weather It

The Australian Tax Office (ATO) have reinvigorated their efforts in debt collection after a period of reduced collection over the pandemic. The ATOs post-pandemic debt collection campaign is characterised by recent surges in Director Penalty Notices (DPNs), an upswing in winding up filings, statutory demands and insolvency appointments. This, coupled with the challenging nature of the current Australian economy has hit businesses hard, especially in NSW, with insolvency appointments up 62 percent in the first half of 2022-23. [...]  READ MORE →

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My Bankruptcy (That Never Was)

By Jacob Reardon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

A bankrupt may apply to the Court under section 153B of the Bankruptcy Act 1966 (Cth) (“the Act”) to have the bankruptcy annulled. With some exceptions, the effect of an annulment is to place the bankrupt back in the position as if there had been no bankruptcy. Most annulments occur following a sequestration order obtained by a creditor – for instance where the debtor was simply unaware of the petitioning creditor’s debt, can pay the debt and is otherwise solvent (an expensive process but perfectly achievable with good advice). [...]  READ MORE →

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Fighting the Wolf at the Door

By Jacob Reardon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

Under section 467(1) of the Corporations Act 2001 (Cth) (“the Act”) the Court has discretion in a winding up application to:

  • Dismiss the application with or without costs, even if a ground on which the Court may order a company to be wound up is proved; or
  • Adjourn the winding up application hearing conditionally or unconditionally; or
  • Make any interim order it thinks fit.

In exercising its discretion, the Court’s attention will be directed to the public interest which usually dictates, in the absence of special circumstances, that an insolvent company be wound up to prevent it from incurring further debts.

In Reform Projects Pty Ltd v Macarthur Projects Pty Ltd [2022] NSWSC 672, Parker J (“Macarthur Projects”) considered an application to have the defendant company (“Macarthur”) wound up in insolvency after it had failed to comply with a statutory demand served by the plaintiff company (“Reform”). [...]  READ MORE →

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HOW MUCH DID THAT COST?

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

With any debt collection service, such as a debt collection agency or a debt collection lawyer, the costs of debt collection can be significant. So the question we are always asked is ‘Can the debtor be held liable for my debt collection costs?’

As we tell our valued debt collection clients, there are at least a couple of different answers to this question. But critically, debt collection clients can take steps to get a better outcome in relation to their debt collection costs! [...]  READ MORE →

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Creditor Bankruptcy Notices: What do I do if I receive one?

Creditor Bankruptcy Notices: What do I do if I receive one?

By Tiani Kasbarian, a Law Clerk of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

What is a Bankruptcy Notice?

The Bankruptcy Act 1966 (Cth) refers to a bankruptcy notice as a formal warning that is issued to a debtor who owes a creditor a minimum of $10,000 or more. This amount was permanently raised from $5,000 in January 2021.

The Notice requires a debtor to pay an amount within 21 days from the date it has been served. If they do not resolve the debt, the subject of the Notice within that 21 day period, the debtor has committed an ‘act of bankruptcy’, which the applicant creditor may rely upon in order to apply to the court for a sequestration order to be made against the debtor’s estate. [...]  READ MORE →

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CAN’T WE STILL BE FRIENDS? CUSTOMER RELATIONSHIPS AND DEBT COLLECTION

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

An effective debt collection system is critical to businesses who provide goods or services “on credit”. But how to go about debt collection whilst still trying to maintain good customer relationships?

In our experience, nothing poisons a business relationship like bad debt collection. At the risk of sounding heretical, sometimes the customer is not right, when they simply refuse to pay for no reason. The value of such customer relationship might be doubted, and the method debt collection may not matter. But in other cases, the customer just needs a gentle (or possibly less gentle!) debt collection technique. In all cases, the question is this: How does a business continue to manage a customer relationship whilst ensuring that their account is paid on time? [...]  READ MORE →