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Debt Collection – How not to

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

Credit Managers and anyone responsible for debt collection or credit control in a business organisation should be aware of the right and wrong ways to collect a debt.

In a recent decision of the Federal Court of Australia in Australian Competition and Consumer Commission v ACM Group Limited (No 2) [2018] FCA 1115 the Court was critical of the actions by a collection agency in the pursuit of a debt.  By example, the Court held that the agency was relentless in telephoning a care facility on over 40 occasions to attempt to speak with a stroke victim patient whose telecommunications debt was unpaid, saying that high-pressure debt recovery techniques are inappropriate. [...]  READ MORE →

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I only have the business name of the debtor, can I still sue them?

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

When looking to commence proceedings against a debtor, one of the first steps to take is to identify exactly who (or what) it is that you have contracted with. Usually this will be the party that is listed as your customer in the written contract.  This may be an individual, company or trustee of some form of trust. Sometimes of course, the relevant paperwork is either missing, or was never created in the first place. [...]  READ MORE →

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Debt Recovery from a Company that has ‘Ceased to Be’…

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

What sort of debt recovery procedure exists for companies that have been deregistered? From time to time Matthews Folbigg are asked to advise clients in relation to debt recovery and enforcement of debts against debtor companies who have been deregistered.

So what can be done for debt recovery against a deregistered company?

Under section 601AD the Corporations Act 2001 (Cth) (“the Act”), once a company is deregistered it ceases to exist as a legal entity. As Monty Python would put it, the company, far from pining for the Norwegian fjords, ‘is no more’, and ‘has ceased to be’. As a result, all of the company’s property vests in ASIC (or in the Commonwealth if held on trust – a not uncommon situation for trading trusts) and any legal proceedings cannot be commenced or continued. [...]  READ MORE →

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Choose your words carefully – the consequences of non-payment of debts

Whether you own your own business, or are responsible for credit control in a large company, you must be careful what representations you make to debtors about the consequences of non-payment.

While you are allowed to accurately explain the consequences of non-payment, it can be tempting to overstate or even misrepresent those consequences. If you do, you may breach laws against unconscionable conduct. This can result in a Court ordering any payments made to be repaid to the debtor.

Examples of statements that have been found to constitute unconscionable conduct include: [...]  READ MORE →

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Special Leave Granted on Amerind Decision

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

The High Court of Australia has recently granted special leave for the decision of the Victorian Court of Appeal in Re Amerind Pty Ltd (Receivers and Managers Appointed) (In Liquidation) [2018] VSCA 41 to be appealed.

Three Justices of the High Court heard the leave application by Carter Holt Harvey Wood Products Pty Ltd, a secured creditor of Amerind Pty Ltd (“Amerind”).  The reasons and decision by their Honours have not yet been posted. [...]  READ MORE →

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How does a trustee in bankruptcy sell jointly owned property?

Trustees in bankruptcy can takes steps to be appointed trustees for sale of property jointly owned by the bankrupt estates to which they have been appointed. Just how they do it, will depend upon the law in each state or territory.

In the matter of Juratowitch (as Trustee of the Bankrupt Estates of Parolin and Parolin) v Parolin & Ors [2016] FCCA 3439 (“Juratowitch”), the issue regarding the granting of the ‘power of sale’ to a Trustee of a Bankrupt Estate where the property did not entirely vest in the Trustee was considered by the Federal Circuit Court of Australia. The trustee was trustee of 2 bankrupt estates, each of which was a 1/3rd owner of a property in Victoria. [...]  READ MORE →

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How to serve a statutory demand

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

In earlier articles, we highlighted the problems that arise when serving a Creditor’s Statutory Demand by post: see You’ve been served! and It Serves You Right?.

This issue reared its head again two weeks ago in winding up proceedings in the Supreme Court of NSW in which we acted for the creditor. The Court was satisfied with all but one element of the evidence required to make the winding up order. The Court did not accept that the statutory demand had been properly posted (even though there was evidence of postage). [...]  READ MORE →

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When is an old debt too old to collect?

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

Sometimes, we are all a bit guilty of putting some of the more difficult to collect debts in the ‘too hard basket’ for too long. For so long that they become an ‘old debt’. But how long can you leave an old debt before it’s too late to collect? And the old debt becomes ‘statute barred’?

For debts in NSW, the clock generally starts running for a period of 6 years from the date the cause of action first accrues (e.g. the date of default). After the expiry of this 6 year period, the legislation restricts you from recovering the debt and it becomes ‘stature barred’. [...]  READ MORE →

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Collecting debts is a legislative minefield

As if running your business isn’t complex enough – the process of chasing and collecting debts can be like wandering through a maze, and that’s even before you make contact with the debtor!

Debt collection is a heavily regulated activity in Australia. State and Federal legislation sets restraints on collection activities and are easy to fall foul of if you are not across the detail. Here is a (non-exhaustive) list of some of the legislation that affects how you can go about chasing debts: [...]  READ MORE →

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“New fees for the Personal Property Securities Register (PPSR) to commence 1 August

The Australian Financial Security Authority (AFSA) has just announced that the fees for lodgement of securities on the PPSR will increase on 1 August.  The mechanisms for lodging securities will remain otherwise unchanged.  Businesses that regularly use the PPSR will need to factor in these increases, particularly if passing on that cost to customers is  a part of their terms and conditions.  Details of the amounts of the increases are expected shortly.  In the meantime, if you have any questions concerning how the PPSR might affect your business , get in touch with us.” [...]  READ MORE →

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“Holding” Deed of Company Arrangement found to be valid by High Court

The High Court has dismissed an attempt to invalidate a Deed of Company Arrangement (DoCA) on the grounds that it failed to specify the property which comprised the Deed fund, and was otherwise contrary to the purposes of Part 5.3 of the Corporations Act.

The legal representatives of Mighty River International Limited asserted that the DoCA relating to Mesa Minerals Limited (Subject to Deed of Company Arrangement) was in fact not really a DoCA at all.  It’s stated purpose was to allow time for the Administrators to further investigate the property and  affairs of the company, with a view to considering whether a restructure was possible.  This was said to run contrary to the express purposes the DoCA scheme, and was instead an attempt by the Administrators to buy more time to conduct investigations that normally take place during the convening period. [...]  READ MORE →

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When its better to get something than nothing, the use of Payment Arrangements in recovering your debt.

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

When looking to recover funds from a Debtor there are numerous ways in which it can be recovered. All of those options should be canvassed and considered carefully. One of those options is an agreed payment arrangement.

Benefits of entering into a payment arrangement include the ability to receive regular periodic payments of funds from the Debtor as well as the ability to monitor the Debtor for any changes in their financial situation. In setting a frequent payment schedule such as weekly or fortnightly, any sudden changes in the Debtor’s financial situation such as the Debtor going into Bankruptcy or the Debtor Company going into external administration can be found out and acted upon quickly. An obvious disadvantage of entering into a payment arrangement is that depending on the amount of the debt owing, it can take some time for the outstanding debt to be paid in full. [...]  READ MORE →