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The Schools Blog: Part 3 – The Fail Safe for Fee Recovery

There is an inherent difficulty in balancing the financial viability of a school with the desire to educate will often come to a head because educating the child is no longer possible. In such cases, it may be necessary to recover school fees through legal proceedings. This instalment of the blog series provides a short summary of the standard recovery process.

  1. Settlement – Negotiations over the terms of a settlement will often continue for the duration of the legal proceedings. Settlement does not mean complete compromise; it may simply mean that the parties have recognised that the cost of legal fees will mean that payment of the unpaid fees is more efficiently and economically resolved between the parties. Legal proceedings can sometimes be necessary to draw parents and guardians to that conclusion.
  2. Legal Letters – A letter of demand provides the parents and guardians with a final opportunity to make payment before Court proceedings are commenced. If drafted on the letterhead of a law firm, this letter will often elicit a response from the parents and guardians. This response may include information about their position as relevant to the commencement and resolution of legal proceedings and, in the best case, provide for the payment of the unpaid fees.
  3. Continue reading…

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A DEBT COLLECTION AGENCY VERSUS A DEBT COLLECTION LAWYER

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

The debt collection process is one which causes a lot of hesitation and frustration which can lead to a misunderstanding of what the key differences are between a debt collection agency and a debt collection lawyer.

Some creditors choose to handle such matters on their own whilst others choose to engage with a debt collection agency at first instance. That being said, engaging with a debt collection lawyer is a step which many avoid due to some misconceptions of how lawyers deal with the debt recovery process and by the same token, engaging a lawyer can seem daunting.

Well, what approach should you take and are there certain circumstances where one is more appropriate than the other?

There are various factors that need to be considered when deciding on whether to engage a debt collection agency or debt collection lawyer, such as:
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The Schools Blog: Part 2 – Recovering fees whilst retaining relationships

Unpaid school fees can cause a strain in the relationship between the school and parents and guardians. The school is often left in a difficult position where the desire to educate children competes with the financial viability of running the school. There are however, a few simple steps that can be taken to resolve conflicts about unpaid school fees between the school and parents and guardians.

  1. Telephone Discussions – Informal discussions are an undervalued tool in resolving fee disputes. Whilst it may be more convenient in the short term to send statements to parents and guardians, a quick conversation with the parents and guardians can help to identify the underlying issues which are preventing payment. Smaller issues can be addressed quickly and efficiently so that the school fees are paid without the need to escalate the non-payment. Larger issues can be referred to a solicitor for consideration of the most efficient and cost effective forward in rectifying the non-payment.
  2. Continue reading…

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The Schools Blog: Part 1 – Starting terms the right way

Terms of Enrolment are often thought of as a mere form in an enrolment pack. The value of Terms of Enrolment go beyond this: correctly drafted agreements are fundamental to establishing enduring relationships between your school and potential parents and guardians. This the case where the Terms of Enrolment set the expectations for your school and the parents and guardians so that if things do go wrong, there is no ambiguity about the rights and responsibilities of your school in recovering fees and continuing education.

So, what terms will set such expectations? Read on to find out.

  1. An obligation for parents and guardians to keep their contact details up to date – Mainlining a line of communication is key to resolving fee related disputes. Placing an onus on parents and guardians to update the school about changing contact details will help to keep the school’s contact records up to date. In time, this will reduce instances where disputes arise from missed fee statements and reminders or proceedings commenced from an inability to contact parents and guardians to discuss payment.
  2. Continue reading…

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Creditor’s Statutory Demand Threshold: What It Is and How to Use It

By Kim Nguyen, Solicitor of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.


On 15 February 2021, the Treasury released a consultation paper “Increasing the Statutory Demand Threshold” seeking submissions on the appropriateness and impacts of permanently increasing the statutory demand threshold. The consultation period expired on 5 March 2021, however, further information can be found here.

What were the temporary changes?

In response to COVID-19, Federal Parliament introduced insolvency reforms to support small businesses in financial distress.  In March 2020, the Government passed the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Coronavirus Act) which temporarily:

  • Increased the statutory minimum debt(s) based on which a creditor can issue a statutory demand from $2,000 to $20,000;
  • Extended the period within which the company may respond from 21 days to six months.

The purpose of the reform was said to be to reduce the pressure upon companies that were struggling to pay their debts.
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Debt Restructuring Part 3 – Restructuring plans

This is the third part in a blog series discussing the new debt restructuring regime, which commences on 1 January 2021. This blog discusses the the process of putting forward a restructuring plan to creditors.

The regime will be implemented through substantial amendments to the Corporations Act 2001 (Cth) (“the Act”) and the Corporations Regulations 2001 (Cth) (“the Regulations“). Relevant links are:

How a restructuring plan is to be proposed is guided by the Regulations (Division 3, Subdivision B). The process is again somewhat similar to a voluntary administration, but instead it avoids the need to call creditors meetings. A regime for the restructuring practitioner to resolve disputes about creditors’ debts is tied into the process. A brief overview of the process follows.

  1. The company has 20 business days (the ‘proposal period’) to prepare and execute a restructuring plan with an accompanying restructuring proposal statement.
  2. Continue reading…

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Debt Restructuring Part 2 – affects on a company under restructuring

This is the second part in a blog series discussing the new debt restructuring regime, which commences on 1 January 2021. This blog discusses the effects on a company entering debt restructuring, and its creditors.

The regime will be implemented through substantial amendments to the Corporations Act 2001 (Cth) (“the Act”) and the Corporations Regulations 2001 (Cth). Relevant links are:

Conduct of the company’s business

Section 453L of the Act will prohibit the directors from entering the company into any transactions dealing with the company’s property, unless one of the following applies:

  1. The transaction was in the ordinary course of business;
  2. The restructuring practitioner consents to the transaction (which can only be given if the restructuring practitioner believes it would be in the interests of creditors);
  3. The transaction was entered into by order of the Court;
  4. The transaction was with a bank, and was made in good faith and in the ordinary course of the bank’s business.
  5. Continue reading…

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Debt Restructuring Part 1 – Introduction, Eligibility & the Restructuring Practitioner

This is the first part in a series of blogs discussing the new debt restructuring regime, which commences on 1 January 2021. The regime will be implemented through substantial amendments to the Corporations Act 2001 (Cth) (“the Act”) and the Corporations Regulations 2001 (Cth). Relevant links are:

The amendments will include a new Part to the Act – Part 5.3B, titled “Restructuring of a company”. The Part sets out the regime (referred to as a ‘restructuring’) for directors of insolvent companies to propose and enter into a ‘restructuring plan’ with creditors. The process is overseen by a ‘restructuring practitioner’, who must be a registered liquidator (s 456B of the Act). The focus on this process is that it allows directors to retain some control of the company, reducing the costs of having an insolvency practitioner involved in day-to-day operations.
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