No Comments

DEBT COLLECTION BY THE MERE FACT …

Debt collection commentary by Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Following on from our article on the Safe Harbour provisions recently introduced, Credit Managers should be also be aware of the proposed additions to the Corporations Act 2001 (“the Act”) that attempt to create a further reforms for companies in financial stress.

The reforms are known as the “ipso facto” provisions. Don’t let the Latin term confuse you as it simply means “by the mere fact”.

An ipso facto clause is commonly the phrase used for a term in a contract that should a certain event occur, then another act can follow. Credit Managers would be aware of their own terms of credit and goods/services supply which (should) include ipso facto clauses. These clauses can include allowing for cessation of the agreement, or at least some modification, should an insolvency event occur that affects the solvency of the customer, such as liquidity issues leading to administration and/or liquidation.
Continue reading…

No Comments

DEBT COLLECTION IN A SAFE HARBOUR

Debt collection commentary by Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Credit Managers should be aware of the reforms made to the Corporations Act 2001 (“the Act”) that attempt to create a shield for directors of companies that believe their company is in financial stress and how it affects their debt collection strategies.

Changes in September 2017 to the Act created section 588GA and deal with specific actions taken by directors in relation to debts incurred after 19 September 2017. These reforms are commonly referred to as the “Safe Harbour Reforms”.

It idea behind the reforms is to assist directors by not penalising them should they recognise their company is in financial distress and seek professional advice from an “appropriately qualified entity” to get out of that situation.

If when a debt has been incurred the director has a suspicion that their company is, or may become, insolvent, and they are attempting to trade out of that position with advice from the appropriately qualified entity, then the director may be protected from the insolvent trading provisions under the Act.
Continue reading…

No Comments

THE DEBT RECOVERY PROCESS

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Obtaining a judgment is a goal in the debt recovery process. Debt collection is not easy and the Court Rules make provision for collecting money but it’s not a one way street.

Judgments in New South Wales can generally be entered by a Court in three ways:

– by default;
– by consent; or
– by Order.

A default judgment is entered following the service of a Statement of Claim and non-compliance by the defendant. If after 28 days elapses and no payment is received and no Defence is filed, the creditor can then file at the Court an affidavit confirming the Claim was served and an application for judgment. Upon processing the application, if the Court accepts the Claim was served and that the debt remains unpaid, it will then enter judgment for the creditor as at a nominated date and amount.
Continue reading…