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Preventing a Service Fail – A Tale of Email v. Snail Mail?

 

In one of our recent matters, a client instructed us to bring winding up proceedings against four companies with the same sole director. The total debt across the four companies was over $300,000.00. Whilst there were four applications before the Court, one common issue was whether the companies had been properly served with the statutory demands relating to the debt owed.

On 11 April 2019, statutory demands were sent to all four companies, with the demands posted to the registered offices of the defendants according to the records of ASIC. Unbeknownst to the creditor, the director had vacated the registered premises of two of the companies over a year earlier, but had failed to update ASIC’s records in respect of this change, and had not put in place a mail-forwarding system. The demands addressed to the other two companies were sent to the office of the director’s solicitor.

No application to set aside the statutory demands was filed by any of the 4 companies. Therefore winding up proceedings were filed against the companies on 28 May 2019. The Originating Processes in respect of the winding up applications were served at the same addresses that the statutory demands had been sent.
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How to Enforce a Judgment in Debt Recovery – Garnishee Orders

By Chloe Howard,  a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

Whilst there are many options for enforcing a judgment debt, in the right matter a Garnishee Order can be an extremely effective debt recovery tool. They are inexpensive to issue and all you need is the debtor’s name to get the process started. So, what is a Garnishee Order and how can a Garnishee Order help in recovering a debt owed to you?

What is a Garnishee Order?

A Garnishee Order is an order of the Court which allows a judgment creditor to recover or ‘garnish’ a debt from a judgment debtor by essentially ‘seizing’ monies from the judgment debtor without their permission by going directly to a third party for payment.

How can a Garnishee Order help recover the debt owed to me?

A Garnishee Order can be enforced in any of the following ways:

Wages

If the judgment debtor is employed and earns an income, a Garnishee Order can be issued to the debtor’s employer. In this situation, the employer will deduct funds from the debtor’s pay cheque and pay that amount directly to you by way of instalments.
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Three reasons why your debt collection efforts should not end when your debtor goes bankrupt

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

Most of us assume that the bankruptcy of a debtor that we are chasing for payment is the death knell for any return. It is true that in most cases the end result of bankruptcy is a minimal or zero return for unsecured creditors. However, there is a lot to say for putting in a relatively small effort to ensure that you are in the mix in case funds become available for distribution.

For example:

  1. The Trustee in Bankruptcy may recover funds from an unexpected source – Trustees don’t simply fill out reports and convene meetings while they administer the bankruptcy. They also search around for possible sources of funds for distribution to unsecured creditors. Once in a while a Trustee will find an asset, or another avenue of recovery, that you did not know existed. For example, a bankrupt may become entitled to a significant asset as part of the deceased estate. The bankrupt could also have made a significant payment to another unsecured creditor within six months of going bankrupt. In both cases, the proceeds of these events can be recovered by the Trustee.
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Is Payment of the Debt Guaranteed? The Answer Is Not Always Straightforward…

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

The concept is simple enough: your terms of trade contain a section to be completed and signed by a person who agrees to personally guarantee all debts of your customer. If the customer can’t or won’t pay, you can turn to the guarantor for payment.

The guarantee is a tried and trusted part of the debt collection strategy for many businesses.

Far too often, we see instances where claims for payment made against guarantors run into serious trouble.

A common response by a guarantor to a debt collection claim is that they did not understand that by signing the document they would be personally bound to pay.

At first blush this might seem a weak argument, but in many cases it is successful.

If a written guarantee is not properly signed, it can open an argument that the person signing was not doing so as a guarantor but in another capacity. This is because most guarantors are also a director of the customer, and the same person who is signing on behalf of the company is providing the guarantee. So if there is any doubt over which “hat” the person signing was wearing at the time, it can throw the guarantee, and collection of the debt, into doubt.
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Proposed Changes to Credit Reporting Before Senate: Will it impact debt recovery?

By Bonnie McMahon an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

The Commonwealth government has introduced the National Consumer Credit Protection Amendment (Mandatory Comprehensive Credit Reporting) Bill 2018 (“the Bill“), which is currently before the Senate.

If passed, the Bill will require the four major banks (Westpac, Commonwealth Bank of Australia, National Australia Bank and Australia and New Zealand Banking Group) to supply their comprehensive credit information to credit reporting agencies, which will include information regarding customers that have been involved in a debt recovery process. The banks will also be required to keep the information they supply, accurate, complete and up to date, on all existing and new accounts.

How will the bill impact credit providers and debt recovery?

It is expected that these new credit reporting requirements will assist credit providers to make more informed assessments, when determining whether to approve credit applications. Further, it is anticipated that these reforms will assist credit providers to identify which applications may require future debt recovery, if approved.
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When is an old debt too old to collect?

By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

Sometimes, we are all a bit guilty of putting some of the more difficult to collect debts in the ‘too hard basket’ for too long. For so long that they become an ‘old debt’. But how long can you leave an old debt before it’s too late to collect? And the old debt becomes ‘statute barred’?

For debts in NSW, the clock generally starts running for a period of 6 years from the date the cause of action first accrues (e.g. the date of default). After the expiry of this 6 year period, the legislation restricts you from recovering the debt and it becomes ‘stature barred’.

However, it is possible to reset the clock on old debts depending on the circumstances and events that take place during the 6 year period. A few examples that might reset the clock for an old debt include:
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When its better to get something than nothing, the use of Payment Arrangements in recovering your debt.

By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

When looking to recover funds from a Debtor there are numerous ways in which it can be recovered. All of those options should be canvassed and considered carefully. One of those options is an agreed payment arrangement.

Benefits of entering into a payment arrangement include the ability to receive regular periodic payments of funds from the Debtor as well as the ability to monitor the Debtor for any changes in their financial situation. In setting a frequent payment schedule such as weekly or fortnightly, any sudden changes in the Debtor’s financial situation such as the Debtor going into Bankruptcy or the Debtor Company going into external administration can be found out and acted upon quickly. An obvious disadvantage of entering into a payment arrangement is that depending on the amount of the debt owing, it can take some time for the outstanding debt to be paid in full.
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Garnishee Orders – 5 things to know.

By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In a previous blog, which can be found here, we explained the advantages and disadvantages of using Garnishee Orders to recover money from a Judgement Debtor.

Here are 5 things you may not have known about Garnishee Orders:

  1. There is no filing fee on a Garnishee Order.

The process of issuing a Garnishee Order against a Garnishee is a quick and inexpensive process.

  1. You can issue a Garnishee Order with limited information about your Judgment Debtor.

An advantage of Garnishee Orders is that you don’t need a lot of information in order to use the garnishing process. In most cases, the name of the debtor is all that is required, however the more information that is provided the quicker the process will be.

  1. A Garnishee Order for Debts can be Repeated.

A Garnishee Order for Debts will garnish an amount owed to, or held on behalf of, the Judgment Debtor at a particular period of time.  However, Garnishee Orders can be issued on the same garnishee multiple times. Therefore, should a Garnishee Order by issued on a bank, but not recover any monies at that time, a Judgment Creditor may choose to wait a further period of time and issue an additional Garnishee Order to the same bank.
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