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CREDITORS AND THE INSOLVENCY LAW REFORM ACT 2016

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

As the 2017 year draws to a close, creditors would be aware that both instalments of the Insolvency Law Reform Act 2016 (“the ILRA”) have come to pass.

What should creditors be aware of under the new regime?

The ILRA is an attempt to reform the insolvency law but also to provide an improvement in the confidence of the public in the overall performance of the trustees and liquidators appointed to the various estates and administrations that are commenced every day.

Under the Corporations Act 2001 only the liquidator of the company can commence an action for preference payments or voidable transactions. The ILRA allows a liquidator to assign a voidable transaction to a third party (including creditors!). This may result in claims being commenced which the liquidator thought were not commercial to pursue.

Under the ILRA creditors are given significant additional powers to call meetings, request information, and documentation regarding the administration of a bankrupt or corporate insolvency administration. This gives control, upon the passing of a resolution, to give certain directions to the trustee or liquidator and in addition, to remove the trustee or liquidator, although the practitioner has a right to apply to the Court to avert removal.
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A matter of some interest…

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

A recent Supreme Court decision serves as a timely reminder of the care to be employed when deciding whether a statutory demand requires a verifying affidavit.

Merlo Group Australia Pty Ltd (“MGA”) obtained a judgment in the District Court against GTH Equipment Pty Ltd (“GTH”). A judgment/order was entered by the Court, recording that “[MGA’s] motion for summary judgment is granted so far as the claim for $143,000 is concerned. Judgment in favour of [MGA] in the sum of $143,000 together with interest under the contract from 3 February 2015.” (Emphasis added).

The claim arose under a contract which included a term that GTH would pay interest at the rate of 15% on all overdue accounts.

A couple of months after judgment was entered, GTH sent to MGA a cheque in the amount of $143,000. Just prior to receiving the cheque, MGA instructed its solicitors to issue a statutory demand in the amount of $198,425.23 comprising the judgment sum plus an amount calculated as interest at the rate of 15% per annum up to the date of the statutory demand.
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DEBT RECOVERY – BANKRUPTCY ENFORCEMENT

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

Obtaining a judgment from the Court is the first step in the debt collection process.  Enforcement is the next step but which option is going to recover that debt.

One option is to proceed with an application to have the individual declared bankrupt.  In an effort to avoid bankruptcy, the individual will have to pay the judgment debt or make other arrangements satisfactory to the creditor.

There is a finality to bankruptcy and so the process to obtain the order gives every opportunity to the judgment debtor to pay the debt.

The application to the Court is by way of a Creditor’s Petition.  The minimum due to the creditor must exceed $5,000 and rely on an act of bankruptcy committed by the individual within six months prior to the presentation of the Petition to the Court.

The most common form of an act of bankruptcy relied upon is non-compliance with a Bankruptcy Notice served upon the individual.  There are other forms of acts of bankruptcy as set out in section 40 of the Bankruptcy Act 1966 such as a Writ of Execution being unsatisfied or “keeping house” to avoid his/her creditors.
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Interstate Judgment Registration

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

Imagine this situation. You obtain an order in your favour against the judgment debtor in relation to debts owing to you. You go to collect your monies and realise the judgment debtor has moved states! Can you still enforce the judgment and collect on your debt?

The answer is yes. There is a process which is regulated under the Service and Execution of Process Act 1992 (Cth) which creates the required national rules and procedures so that court decisions can be registered and enforced in any state of Australia.

It is important to check with the particular state in which you wish to register the judgment, however in general, to register an interstate judgment you will need to:

  1. Obtain a sealed or certified copy of the interstate judgment or order;
  2. Lodge the appropriate completed application along with a supporting affidavit and the sealed copy of the interstate judgment or order with the registrar of the appropriate court with the jurisdiction; and
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Out of Time (“Missed it, …. by THAT much”)!

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

Recent amendments to the Corporations Act 2001 (“the Act”), introduced by the Insolvency Law Reform Act 2016, now require registered liquidators to renew their registration with ASIC every 3 years: see s 20-75 of Schedule 2 of the Act (“Schedule 2”).

Under the transitional provisions, liquidators who were registered before 1 March 2017 remain registered until the first anniversary date of their existing registrations occurs: see section 1555 of the Act. For example, if a liquidator was registered on 10 November 2001, the date upon which the liquidator’s transitional registration will expire is 10 November 2017.

It is essential that registered liquidators are aware of their first anniversary date and ensure their renewal application is lodged with ASIC before their registration expires. Otherwise the liquidator will need to make the walk of shame to the court for an order extending the time within which to lodge their renewal application.
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Foreign Worker Levy Law Change

Immigration law Changes – Update on Foreign Worker Levy

Background

The Australian Federal Budget included a new levy for employers sponsoring foreign workers. Consequently under the new skilled migration scheme, employers will have to pay a levy of up to $5000 per worker.

What does this mean for Employers?

In essence, if the changes are passed in Parliament:

• the requirement for employers to spend 1-2% of payroll on training would be abolished
• employees on temporary work visas will require a levy of $1200 or $1800 per year
• employees on permanent skilled visas will require a one-off levy of $3000 or $5000
• the levy will contribute to a Skilling Australians Fund
• the Skilling Australians Fund will support up to 300,000 apprentices, trainees, pre-apprentices and higher level skilled Australians
Tips for Employers

Our Matthews Folbigg Workplace Solutions immigration law team and Migration Agent recommends employers:

• review their employment contracts and employment law policies at least once every 12 months to ensure they remain current with workplace practices and all employment laws
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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.
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Accident impacts on witnesses and family members

Personal Injury Lawyer – loss and trauma

Sometimes accidents can have a debilitating effect not only on the victims of injury, but also on close family or witnesses to the incident.

The witness or close family member of the victim may experience symptoms of secondary trauma, which often mimic those of post-traumatic stress disorder. Experts suggest that this insidious form of stress can be as debilitating as experiencing the trauma in person.

Those experiencing symptoms of secondary trauma should speak to their doctor about coping strategies and seek professional counseling where possible. This will assist them in managing the potential health impacts and help prevent the development of ongoing mental injuries.

If a person has experienced the sudden death or significant injury of a family member, they may also be deprived of the financial support or care that they would have received but for the victim’s injuries.

There may be compensation available if the death or injury was the result of another’s negligence. This could include compensation for financial losses, care, medical and funeral expenses. There may also be separate compensation available for witnesses or family members who are diagnosed with consequential mental harm.
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