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Debt Recovery – Why should I use a Lawyer?

By Darrin Mitchell, a Senior Associate in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.

Meet Darrin

Aside from being a lawyer, Darrin has been involved in debt recovery for 30 years, helping companies and individuals recover monies due and owing to them.

Before Darrin was admitted as a lawyer, he worked for a finance company and a mercantile agent so he saw first hand the nuts and bolts of dealing with debtors.

This experience has given Darrin a boost in assisting clients to recover monies in-house up to the management of a full blown hearing where the debtor defends everything from non-supply of goods to alleging that the goods supplied were defective.  It also allows Darrin to give advice on the implications of debt recovery, so clients can make practical, commercial decisions.

Why should I use a lawyer to collect my debts?

The answer is that in most cases you should not use a lawyer.  Most lawyers don’t have the X factor that will get a debt recovered as for most, debt recovery is just one of many areas of law listed on the firm’s “We Do …” list on their webpage.
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Creditor’s Requests – When is it unreasonable?

By Bonnie McMahon, an Associate in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.

Many external administrators and trustees will have been receiving requests from creditors under section 70-45 of the new insolvency practice schedules, which were first introduced into the Corporations Act and Bankruptcy Act in September 2017.

This new provision allows creditors to request information, reports or documents from an external administrator or trustee.

At this stage, there is not a lot of guidance as to when external administrators and trustees can refuse to comply with these requests, especially as the scope of section 70-45 has only been considered by the Court in one reported case to date.

However, there is some guidance in the Insolvency Practice Rules which insolvency practitioners should be aware of, especially if they are concerned that complying with a creditor’s request may open them up to criticism by another creditor or a third party.

Section 70-15 of the rules, sets out when a creditor’s request will be unreasonable.
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Creditor’s statutory demand issued pending negotiations is upheld

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

In a recent matter which we acted for the Defendant (In the matter of Precise Training Pty Ltd [2018] NSWSC 1383), we successfully defended an application to set aside a creditor’s statutory demand issued by the Chief Commissioner of State Revenue (“the Commissioner“) against Precise Training Pty Ltd, the Plaintiff.


The Commissioner issued a number of assessments for payroll tax to Precise Training in 2015 as a member of a larger tax group. Precise Training disputed the assessments and lodged an objection on 10 December 2015. The Commissioner disallowed the objection and proceeded to enter into negotiations for payment of the assessments.

Precise Training lodged a second objection on 18 July 2016 and requested that the Commissioner undertake not to commence recovery proceedings while the second objection was being decided and the parties were in negotiations.

On 10 November 2016, the Commissioner responded to the request for an undertaking advising that “recovery proceedings have been on hold” while the objection is being decided and the parties are in discussions to settle the disputed assessments.

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Not opening your emails? That is not an excuse to avoid valid service!

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

A recent Supreme Court matter has determined that service of an application to set aside a statutory demand was validly served in time, even though the solicitor in question did not open the email serving the application until the expiration date for service had passed.

In March 2019, the plaintiff’s solicitor and the defendant’s solicitor commenced communicating in an attempt to facilitate a resolution of the dispute between their respective clients. The communications predominantly took place by email.

On 11 September 2019, the defendant issued on the plaintiff a statutory demand. The statutory demand was served on the plaintiff initially by email from the defendant’s solicitor.

On 27 September 2019, the defendant’s solicitor sent an email to the plaintiff’s solicitor enclosing a letter which advised that they held instructions to accept any application to set aside the statutory demand.
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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:


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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