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Debt Recovery of Judgments – Debt Collection and the Judgment Debtor

By Jamieson Naylor, Law Clerk at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group.

Debt recovery can be quite confusing and while all debt collection will vary in complexity, here are some answers to a few of our most commonly asked debt collection questions. Hopefully these will help clarify the debt recovery process.

 

What is the best debt collection process to reduce outstanding invoices?

It may sound trite but the best way to avoid debt collection is not to become involved in the debt recovery process in the first place! Well established credit management procedures can minimise the chances of debtors delaying payment and avoid the need for formal debt recovery processes (including debt collection agents (or even debt recovery lawyers). If you are having difficulty with the volume or age of your receivables, it would be worth seeking legal advice on template contracts, terms and conditions and any other credit management procedures that are in operation, which might give you the edge on managing the debt collection process and avoiding formal debt recovery processes. [...]  READ MORE →

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Till Debt Do Us Part: Family Law and Corporate Insolvency

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

Under section 1337H of the Corporations Act 2001 (Cth) (“the Act”), a Court exercising Federal or State Jurisdiction can transfer a civil proceeding arising under the Act to another Court with appropriate jurisdiction where it considers that it is in the interests of justice to do so. What about where the defendant directors to an insolvent trading claim have commenced family law proceedings between themselves? [...]  READ MORE →

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Get out of (Liability) Gaol Free under section 447A

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

Section 447A of the Corporations Act 2001 (Cth) (“the Act”) enables the Court to make such orders as it thinks appropriate as to the operation of Part 5.3A of the Act. Since its introduction, the Courts have adopted an expansive construction of the provision and have liberally applied the power in a variety of contexts. Accordingly, the provision has become something of a panacea for multiple ills in the context of voluntary administration and has been used in various instances among others to: [...]  READ MORE →

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Interest on Costs: Interest-ing!

By Anica Cunanan, a Solicitor of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Are you commencing proceedings and wondering if you can seek interest on costs? What is interest on costs?

The award of interest on costs is dealt with under the Civil Procedure Act 2001 (NSW) (“the Act”), specifically s 101. It is often a matter of discussion as to whether one has the ability to recover interest on costs and if so, under what circumstances.

Prior to 2015, no interest was payable on costs unless the court made such an order. In November 2015, s 101 of the Act was amended to allow for interest to be payable on costs under ss 101(4) and (5). However, an application can still be made under the Act for interest on costs for actions that commenced prior to 24 November 2015. [...]  READ MORE →

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Assigning Security Interests in Personal Property

By Andrew Hack, a Solicitor of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Why assign?

Do you have a debt that has been on your ledger but you are having difficulty recovering it? Are you sick of chasing the same debtor with no result?

Creditors are able to realise value from debts that they no longer want to chase by selling them to third parties. The most common occurrence is where companies sell a book of debts to a debt collection agency. Debt collectors frequently buy debts from creditors in order to pursue the debtors as an alternative to acting as the creditor’s debt collection agent. [...]  READ MORE →

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A Picture of the Risk and Insolvency Landscape in Australia

By Shevon Faux, a Solicitor of Matthews Folbigg Lawyers

Influence of COVID-19 on Insolvency and Future Expectations

When the COVID-19 pandemic hit Australia in March 2020, insolvencies were expected to increase dramatically. To reduce this, mitigation measures were implemented through:

  • state and federal government support payments;
  • the ATO reducing debt enforcement activity;
  • temporary debt moratoria and increased debt recovery thresholds; and
  • Certified Credit Executives (CCEs) implementing improvements to their processes and strategies to combat risks.

These factors all contributed to the significant decline in corporate and personal insolvency appointments in Australia from 2019 to 2022.

On the recovery from COVID-19, five common factors currently driving the threat of insolvency are:

  1. supply chain issues that have caused essential supplies to be delayed, resulting in company’s products and services to also be delayed limiting ability to generate revenue;
  2. supply chain cost increases and inflation which has reduced profitability, especially in situations where there are ongoing fixed cost contracts or the limited ability to pass on those increased costs;
  3. the lack of staff to meet demands reducing the ability for businesses to deliver products and services, limiting revenue;
  4. slow recoveries in international travel, affecting industries hardest hit by COVID such as tourism, hospitality and international education; and
  5. significant adverse weather events such as bushfires, floods and storms in the last 2 years which continue to take a significant toll on many regions throughout Australia limiting the ability to deliver goods and services in a timely and cost effective manner.

Since 2011, the number of insolvencies has been declining. Contrary to expectations set out in the 2021 Risk Report issued by the Australian Institute of Credit Managers (AICM), corporate insolvencies in 2021 have continued to decrease, dropping a further 9% from the low level set in 2020. This is despite the reduction in government support and temporary enforcement protections coming to a halt. Personal insolvencies also remained low at around 400 per fortnight compared to around 900 prior to 2020. While these figures show a dramatic decrease in insolvencies, it is generally regarded as masking the fact that only 1 in 5 shut downs go through a ‘proper’ insolvency process, with a significant proportion of companies simply being deregistered through ASIC. Many other so-called ‘zombie’ companies have otherwise ceased operations, but have yet to enter a formal insolvency process. [...]  READ MORE →

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Do you want to continue litigation against a party declared bankrupt? The Federal Court of Australia provides insight in Yan v Spyrakis as trustee in bankruptcy for Liu [2022] FCA 872

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers.

In Yan v Spyrakis as trustee in bankruptcy for Liu [2022] FCA 872 (“Yan v Spyrakis”), the Federal Court of Australia (“FCA”) re-stated the principles to be applied when considering whether to continue litigation against a party that has been declared bankrupt.

Background

Mr Liu (“the Bankrupt”) was made bankrupt on 11 November 2011 on his own petition. At the time of his bankruptcy, there were proceedings pending in the Supreme Court of New South Wales (“the Supreme Court proceedings”) in which the Bankrupt and a number of related companies were the defendants and Mr Yan was the plaintiff. [...]  READ MORE →

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Replacing a Trustee of a Bankrupt Estate

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers

If you are concerned about the appointment of a trustee of a bankrupt estate, or you have a disagreement with a trustee, or a trustee has decided to retire, you may be able to replace that trustee. This article explores various ways in which you can replace a trustee of a bankrupt estate.

Replacing a trustee by resolution at a creditors’ meeting

If you are a creditor, you can remove and replace a trustee of a bankrupt estate by way of a resolution at a creditors’ meeting (Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), Schedule 2 (“the Insolvency Practice Schedule”), section 90-35(1)). Notice of the meeting must be provided to all persons who are entitled to receive notice at least 5 business days before the meeting (Insolvency Practice Schedule, section 90-35(2)). [...]  READ MORE →

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Debt Recovery – Obtaining Admission from Debtors

OBTAINING ADMISSION FROM DEBTORS

Creditors are frequently frustrated with the time it can take to prosecute defended debt recovery proceedings in court.

Debt recovery proceedings can take somewhere usually between 6 to 24 months before obtaining a judgment against the debtor. However, in the recent case of Mary Antoinette Aviani v Jennifer Loh [2022] NSWSC 658 a creditor was able to obtain a judgment much earlier on in the debt recovery proceedings based on admissions the debtor conceded at an interlocutory hearing.

De facto partners were in a dispute regarding contributions towards the purchase of jointly owned property. The Plaintiff sought and obtained an injunction against the Defendant restraining property dealings. The matter next came before Kunc J where the injunction was modified. The Defendant required access to funds to conclude a property purchase. [...]  READ MORE →

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Filing Fee Rise!

By Hayley Hitch, a Senior Associate of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group.

There has been a minimal increase in the costs associated with filing documents in the State’s Courts over the past 3 years whilst the country was dealing with the financial ramifications of COVID-19. However, a rise has been imminent.

The NSW Attorney-General has now considered the costs associated with commencing and running proceedings within the Courts of New South Wales and upon evaluating such costs has enacted the Civil Procedure Amendment (Fees) Regulation 2022 (NSW). [...]  READ MORE →

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A PERMANENT INCREASE OF THE BANKRUPTCY THRESHOLD

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

Is having a judgment against a personal debtor enough to serve a bankruptcy notice and bankrupt the debtor? Can you make a debtor bankrupt by serving a bankruptcy notice? What else do you need to know to bankrupt a personal debtor?

A creditor serving a bankruptcy notice is the first step to potentially making a debtor bankrupt. The bankruptcy notice must be based on a judgment against a personal debtor in an Australia court and be less than 6 years old. [...]  READ MORE →