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AICM Risk Report 2023

Australian Institute of Credit Management – Risk Report 2023

Credit professionals play a crucial role in any business, ensuring that both the risks of
defaulting on contractual obligations are managed, and that payment of goods or services
are received in a timely manner.

The Australian Institute of Credit Management (AICM) is a member body for commercial and
consumer management professionals formed with the goal of helping their members,
partners, government, other related bodies and the business community to succeed in
credit-related matters.

The AICM has released their Risk Report 2023 (Report) which provides a succinct and
useful insight on how recent and future economic conditions are impacting credit
professional’s abilities to manage risk and ensure a business is paid promptly for their
services. The Report draws on survey results collected from AICM members and Certified
Credit Executives. [...]  READ MORE →

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Security for Costs: How to not get dragged down by the impecunious Plaintiff

By Eleanor Campbell-Rogers, a Law Clerk of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

‘A successful litigant is entitled to the fruits of their litigation’.

Whilst this might be true, a successful defendant can often be left with a significant legal bill despite a court ordering the plaintiff to pay their costs of the proceeding – winning the battle but losing the war.

Imagine you find yourself as a defendant in proceedings that you never saw coming and which should ultimately never have happened. The plaintiff’s claims may lack merit and have very low prospects of success, but they commenced proceedings against you anyway in a desperate attempt to recover money that they lost as a consequence of their own actions. After all of the hours of stress, sleepless nights, phone calls, meetings, and thousands of dollars of legal fees, you and your legal team emerge from litigation victorious, with the plaintiff to pay your costs of the proceeding – only to find out, the plaintiff has no money, no assets and is unable to pay your legal fees. [...]  READ MORE →

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The Judgment: Is it the end of the Debt Recovery Process?

In DW Fox Tucker Pty Ltd v Morgan [2023] SASCA 11, the Supreme Court of South Australia Court of Appeal allowed an appeal by DW Fox Tucker Pty Ltd (‘the Creditor’) regarding the decision that there was no costs agreement between the Creditor and the director (‘Mr Morgan’) of TS Morgan Developments Pty Ltd (‘the Company’).

Background

The Creditor obtained judgment against Mr Morgan in relation to unpaid legal fees incurred whilst the Creditor was acting for the Company. The Company had gone into voluntary administration in March 2017. However, the judgment was set aside in February 2020. Mr Morgan then sought a declaration that there was no costs agreement between him and the Creditor, and the Court ruled in his favour. However, the Creditor challenged this decision to the Court of Appeal. [...]  READ MORE →

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Australian Institute of Credit Management – Risk Report 2023

By Dylann Brew, Solicitor at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Credit professionals play a crucial role in any business, ensuring that both the risks of defaulting on contractual obligations are managed, and that payment of goods or services are received in a timely manner. To achieve this, they need to consider the following relevant factors:

  • consumer behaviour and monitoring any changes;
  • changes to relevant legislation and regulations;
  • economic trends and monitoring any changes;
  • anticipated and forecasting future performance of the business.

These factors should be considered by every business to allow informed decisions to be made to mitigate risks. [...]  READ MORE →

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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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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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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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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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WHY JUST DO DEBT COLLECTION WHEN YOU CAN HAVE A DEBT COLLECTION LAWYER!

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

With the current economic crisis and the increase in the cost of living, debt collection is also on the rise. We have found that creditors are pursuing debt collection, no matter the quantum of that debt. Creditors are becoming less patient and less lenient with informal debt collection and want to see more formal, efficient and effective debt collection methods, sooner.

Debt collection by commencing proceedings tends to be the last resort in the debt collection process. However, in current times plenty of creditors have decided to skip the first few steps, and jump straight to formal debt collection. There are numerous creditors who are simply taking a much “harder” approach with debt collection and commencing proceedings from the “get go.” This can be an efficient and effective approach to debt collection, but it would be sensible not to apply a “one size fits all” approach to debt collection. Many of a creditor’s debt collection decisions should be made on a case-by-case basis, taking into account the debt collection sum, debt collection fees already incurred, and any known factors regarding the debt or the debtor which will make a particular debt collection method most effective. [...]  READ MORE →

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WINDING UP DEBT COLLECTION!

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Debt collection is winding up as interest rates increase and margins are squeezed.  Generally, creditors want a debt collection process which will recover the maximum amount of any debt for the least amount of work and cost.

Well, what debt collection short cuts are there? When reviewing your debt collection process, what other options exist besides litigation?

Debt collection should not be a “one size, fits all.” When formulating or reviewing your debt collection processes, make sure you understand the advantages and disadvantages of each debt collection avenue and tailor this to particular debt collection situation. A good debt collection system will factor in multiple issues such as the nature and amount of the debt, as well as the circumstances attitude and likely response of the debtor company. A good debt collection system will help you determine which debt collection avenue is appropriate. [...]  READ MORE →

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The Economic Storm – and How To Weather It

The Australian Tax Office (ATO) have reinvigorated their efforts in debt collection after a period of reduced collection over the pandemic. The ATOs post-pandemic debt collection campaign is characterised by recent surges in Director Penalty Notices (DPNs), an upswing in winding up filings, statutory demands and insolvency appointments. This, coupled with the challenging nature of the current Australian economy has hit businesses hard, especially in NSW, with insolvency appointments up 62 percent in the first half of 2022-23. [...]  READ MORE →

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Creditor Bankruptcy Notices: How to serve them correctly as a creditor

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

What is a Bankruptcy Notice?

Under the Bankruptcy Act 1966 (Cth), a bankruptcy notice serves as a formal warning to a debtor who owes a judgment debt of at least $10,000. This amount was permanently raised from $5,000 in January 2021.

I am a Creditor who is owed money by a Debtor, how do I serve a bankruptcy notice?

A creditor must hold a judgment against the debtor for more than $10,000, and which was made within the previous 6 year period in an Australian Court. Foreign judgments may be able to be registered in Australia. Judgment debts older than 6 years may still be enforced but not using a Bankruptcy Notice. An application for a Bankruptcy Notice is made to the Official Receiver, through the Australian Financial Security Authority. [...]  READ MORE →