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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 →

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OFFER UP!

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

Calderbank offers are based on the principles outlined in the English case of Calderbank v Calderbank [1975] 3 All ER 333. Whether you are the offeror or the offeree, it is important to understand the effect of these offers.

Calderbank Offer: What is it?

A Calderbank offer is designed to put the offeror in a position to apply to the court for an indemnity costs order, in circumstances when the offeror receives a better outcome than the amount that was offered. Should an indemnity costs order be granted, the unsuccessful party will pay a higher proportion of the successful party’s costs. Emphasis is placed on the word “higher”. In many civil jurisdictions (but by no means all), “costs follow the event,” and so the unsuccessful party might expect to have to pay some of the successful party’s costs. If ‘indemnity’ costs are awarded, the amount payable is higher. Somewhat  counterintuitively however, the amount is almost never “all” the successful party’s costs, for various reasons. However, in many cases the difference between recovering some costs, and recovering a much higher proportion of those costs, can make an enormous difference. And by making a Calderbank offer, a party will improve the chances of recovering a higher proportion of costs. [...]  READ MORE →

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Debt Recovery of Judgments – Debt Collection and the Judgment Debtor

By Jamieson Naylor, Law Clerk at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Debt recovery can be quite confusing and while all debt collection will vary in complexity, here are some answers to a few of our most commonly asked debt collection questions. Hopefully these will help clarify the debt recovery process.

 

What is the best debt collection process to reduce outstanding invoices?

It may sound trite but the best way to avoid debt collection is not to become involved in the debt recovery process in the first place! Well established credit management procedures can minimise the chances of debtors delaying payment and avoid the need for formal debt recovery processes (including debt collection agents (or even debt recovery lawyers). If you are having difficulty with the volume or age of your receivables, it would be worth seeking legal advice on template contracts, terms and conditions and any other credit management procedures that are in operation, which might give you the edge on managing the debt collection process and avoiding formal debt recovery processes. [...]  READ MORE →

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Till Debt Do Us Part: Family Law and Corporate Insolvency

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

Under section 1337H of the Corporations Act 2001 (Cth) (“the Act”), a Court exercising Federal or State Jurisdiction can transfer a civil proceeding arising under the Act to another Court with appropriate jurisdiction where it considers that it is in the interests of justice to do so. What about where the defendant directors to an insolvent trading claim have commenced family law proceedings between themselves? [...]  READ MORE →

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Get out of (Liability) Gaol Free under section 447A

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

Section 447A of the Corporations Act 2001 (Cth) (“the Act”) enables the Court to make such orders as it thinks appropriate as to the operation of Part 5.3A of the Act. Since its introduction, the Courts have adopted an expansive construction of the provision and have liberally applied the power in a variety of contexts. Accordingly, the provision has become something of a panacea for multiple ills in the context of voluntary administration and has been used in various instances among others to: [...]  READ MORE →

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Interest on Costs: Interest-ing!

By Anica Cunanan, a Solicitor of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Are you commencing proceedings and wondering if you can seek interest on costs? What is interest on costs?

The award of interest on costs is dealt with under the Civil Procedure Act 2001 (NSW) (“the Act”), specifically s 101. It is often a matter of discussion as to whether one has the ability to recover interest on costs and if so, under what circumstances.

Prior to 2015, no interest was payable on costs unless the court made such an order. In November 2015, s 101 of the Act was amended to allow for interest to be payable on costs under ss 101(4) and (5). However, an application can still be made under the Act for interest on costs for actions that commenced prior to 24 November 2015. [...]  READ MORE →

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Assigning Security Interests in Personal Property

By Andrew Hack, a Solicitor of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Why assign?

Do you have a debt that has been on your ledger but you are having difficulty recovering it? Are you sick of chasing the same debtor with no result?

Creditors are able to realise value from debts that they no longer want to chase by selling them to third parties. The most common occurrence is where companies sell a book of debts to a debt collection agency. Debt collectors frequently buy debts from creditors in order to pursue the debtors as an alternative to acting as the creditor’s debt collection agent. [...]  READ MORE →

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A Picture of the Risk and Insolvency Landscape in Australia

By Shevon Faux, a Solicitor of Matthews Folbigg Lawyers

Influence of COVID-19 on Insolvency and Future Expectations

When the COVID-19 pandemic hit Australia in March 2020, insolvencies were expected to increase dramatically. To reduce this, mitigation measures were implemented through:

  • state and federal government support payments;
  • the ATO reducing debt enforcement activity;
  • temporary debt moratoria and increased debt recovery thresholds; and
  • Certified Credit Executives (CCEs) implementing improvements to their processes and strategies to combat risks.

These factors all contributed to the significant decline in corporate and personal insolvency appointments in Australia from 2019 to 2022.

On the recovery from COVID-19, five common factors currently driving the threat of insolvency are:

  1. supply chain issues that have caused essential supplies to be delayed, resulting in company’s products and services to also be delayed limiting ability to generate revenue;
  2. supply chain cost increases and inflation which has reduced profitability, especially in situations where there are ongoing fixed cost contracts or the limited ability to pass on those increased costs;
  3. the lack of staff to meet demands reducing the ability for businesses to deliver products and services, limiting revenue;
  4. slow recoveries in international travel, affecting industries hardest hit by COVID such as tourism, hospitality and international education; and
  5. significant adverse weather events such as bushfires, floods and storms in the last 2 years which continue to take a significant toll on many regions throughout Australia limiting the ability to deliver goods and services in a timely and cost effective manner.

Since 2011, the number of insolvencies has been declining. Contrary to expectations set out in the 2021 Risk Report issued by the Australian Institute of Credit Managers (AICM), corporate insolvencies in 2021 have continued to decrease, dropping a further 9% from the low level set in 2020. This is despite the reduction in government support and temporary enforcement protections coming to a halt. Personal insolvencies also remained low at around 400 per fortnight compared to around 900 prior to 2020. While these figures show a dramatic decrease in insolvencies, it is generally regarded as masking the fact that only 1 in 5 shut downs go through a ‘proper’ insolvency process, with a significant proportion of companies simply being deregistered through ASIC. Many other so-called ‘zombie’ companies have otherwise ceased operations, but have yet to enter a formal insolvency process. [...]  READ MORE →

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Do you want to continue litigation against a party declared bankrupt? The Federal Court of Australia provides insight in Yan v Spyrakis as trustee in bankruptcy for Liu [2022] FCA 872

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers.

In Yan v Spyrakis as trustee in bankruptcy for Liu [2022] FCA 872 (“Yan v Spyrakis”), the Federal Court of Australia (“FCA”) re-stated the principles to be applied when considering whether to continue litigation against a party that has been declared bankrupt.

Background

Mr Liu (“the Bankrupt”) was made bankrupt on 11 November 2011 on his own petition. At the time of his bankruptcy, there were proceedings pending in the Supreme Court of New South Wales (“the Supreme Court proceedings”) in which the Bankrupt and a number of related companies were the defendants and Mr Yan was the plaintiff. [...]  READ MORE →

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Replacing a Trustee of a Bankrupt Estate

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers

If you are concerned about the appointment of a trustee of a bankrupt estate, or you have a disagreement with a trustee, or a trustee has decided to retire, you may be able to replace that trustee. This article explores various ways in which you can replace a trustee of a bankrupt estate.

Replacing a trustee by resolution at a creditors’ meeting

If you are a creditor, you can remove and replace a trustee of a bankrupt estate by way of a resolution at a creditors’ meeting (Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), Schedule 2 (“the Insolvency Practice Schedule”), section 90-35(1)). Notice of the meeting must be provided to all persons who are entitled to receive notice at least 5 business days before the meeting (Insolvency Practice Schedule, section 90-35(2)). [...]  READ MORE →