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Fighting the Rearguard Action – s 459S and Winding Up Applications

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

In an application to wind up a company for failure to comply with a statutory demand, section 459S of the Corporations Act 2001 (Cth) (“the Act”) operates to exclude grounds that a defendant either did rely on, or could have relied on, in an earlier application to set aside a statutory demand.

In the Explanatory Memorandum to the Corporate Law Reform Bill 1992, the stated policy goal of section 459S is to: [...]  READ MORE →

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The House that Estoppel Built?

The full version of this article was originally published in the Lexis Nexis Insolvency Law Bulletin

By Jacob Reardon, solicitor, and Stephen Mullette, Principal, Matthews Folbigg Lawyers

How long does a bankruptcy trustee have to sell a bankrupt’s home? What if the Trustee allows the bankrupt to live in the property, and pay the mortgage, council, and water rates, and repair the property for almost 5 years? Or for 8 years? More? Will the Trustee eventually become estopped from selling the property after such a long period? The answer may surprise. [...]  READ MORE →

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Dangers of Division 7A Loans In Liquidation

By Ashley Muscat, Law Clerk at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

It is common for associates and shareholders of companies in Australia to withdraw company funds through a loan account. There are lots of tax reasons why this is a popular way to access profits from a corporate vehicle. Of course, the ATO knows this, and so if the loan is not properly documented and does not satisfy the criteria to be a Division 7A loan, the amount will be deemed to have been paid out as a dividend, and taxed in the hands of the shareholder, usually unfranked. [...]  READ MORE →

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What is the best business structure for you?

No matter what stage your business is in or the type of business you operate, it is critical to have the right business structure in place for many reasons, including to safeguard your personal and business assets, minimise risk and tax implications and optimise returns.  Each business structure has its own benefits and risks as well as criteria and regulatory requirements, which should be considered before adopting a business structure that is ideal for your business and personal needs.

Sole traders and partnerships [...]  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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What Constitutes An ‘Unfair’ Term?

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

Unfair terms in a contract can often be overseen and become problematic well after a contract has been entered into. Part 2.3 of the Australian Consumer Law (“the ACL”) aims to protect consumers in circumstances where they have limited opportunity to negotiate with businesses. It is therefore important to consider whether your agreements contain any terms that may be characterised as ‘unfair’. A term may be considered ‘unfair’ if it: [...]  READ MORE →

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What can be considered a “charge” when providing credit under the National Credit Code?

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

In Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2022] FCAFC 108 (“ASIC v BHFS”), the Full Court of the Federal Court of Australia considered the statutory interpretation of “charge that is or may be made for providing the credit” in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (“the Credit Code”) in the context of a short-term credit arrangement involving multiple contracts. [...]  READ MORE →

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Making Debt Collection Successful – The Key: Information!

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

If you are providing goods and services on credit, at times you may be required to engage in the process of debt collection. So, how can you make the debt collection process as streamlined and successful as possible? As you may have guessed, the key is information!

There are steps that can be taken and searches that can be conducted to obtain information surrounding a debt or debtor, and in our experience, the prospects of successfully recovering a debt greatly improve when a creditor has an abundance of information. The debt collection process will also generally be much cheaper and require less investigative measures. [...]  READ MORE →

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Sorry, the feeling’s not mutual! – Set-off no longer available for unfair preference claims

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

In the past, set-off has been used as a defence against unfair preference (and other insolvency) claims with some uncertain and inconsistent outcomes. This ends now in relation to unfair preferences with a major win in favour of liquidators and will most likely lead to a similar outcome with other insolvency proceedings.

In Metal Manufactures Pty Limited v Morton [2023] HCA 1 (“Metal Manufacturers v Morton”), the High Court held that set-off is not available as a defence to a creditor being sued for an unfair preference by a liquidator. The High Court found that the debt owing by the company in liquidation had no mutuality with the unfair preference claim by the Liquidator in the winding up. [...]  READ MORE →

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Standing to Stay?

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers

Once a company has been wound up, it can be very difficult (but by no means impossible) to undo or even temporarily halt the winding up process. Only those with proper standing may even attempt such a feat.

In Sebie v ENA Development Pty Ltd (in liquidation) (Receiver Appointed), in the matter of ENA Development Pty Ltd [2023] FCA 2, the Federal Court of Australia (“the FC”) rejected an application made by Mr Robert Sebie (“Mr Sebie”) for a stay of the winding up of ENA Development Pty Ltd (“ENA”). [...]  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 →