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What Constitutes An ‘Unfair’ Term?

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

Unfair terms in a contract can often be overseen and become problematic well after a contract has been entered into. Part 2.3 of the Australian Consumer Law (“the ACL”) aims to protect consumers in circumstances where they have limited opportunity to negotiate with businesses. It is therefore important to consider whether your agreements contain any terms that may be characterised as ‘unfair’. A term may be considered ‘unfair’ if it: [...]  READ MORE →

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What can be considered a “charge” when providing credit under the National Credit Code?

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

In Australian Securities and Investments Commission v BHF Solutions Pty Ltd [2022] FCAFC 108 (“ASIC v BHFS”), the Full Court of the Federal Court of Australia considered the statutory interpretation of “charge that is or may be made for providing the credit” in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth) (“the Credit Code”) in the context of a short-term credit arrangement involving multiple contracts. [...]  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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Sorry, the feeling’s not mutual! – Set-off no longer available for unfair preference claims

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

In the past, set-off has been used as a defence against unfair preference (and other insolvency) claims with some uncertain and inconsistent outcomes. This ends now in relation to unfair preferences with a major win in favour of liquidators and will most likely lead to a similar outcome with other insolvency proceedings.

In Metal Manufactures Pty Limited v Morton [2023] HCA 1 (“Metal Manufacturers v Morton”), the High Court held that set-off is not available as a defence to a creditor being sued for an unfair preference by a liquidator. The High Court found that the debt owing by the company in liquidation had no mutuality with the unfair preference claim by the Liquidator in the winding up. [...]  READ MORE →

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Standing to Stay?

By Aritree Barua, Solicitor at Matthews Folbigg Lawyers

Once a company has been wound up, it can be very difficult (but by no means impossible) to undo or even temporarily halt the winding up process. Only those with proper standing may even attempt such a feat.

In Sebie v ENA Development Pty Ltd (in liquidation) (Receiver Appointed), in the matter of ENA Development Pty Ltd [2023] FCA 2, the Federal Court of Australia (“the FC”) rejected an application made by Mr Robert Sebie (“Mr Sebie”) for a stay of the winding up of ENA Development Pty Ltd (“ENA”). [...]  READ MORE →

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My Bankruptcy (That Never Was)

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

A bankrupt may apply to the Court under section 153B of the Bankruptcy Act 1966 (Cth) (“the Act”) to have the bankruptcy annulled. With some exceptions, the effect of an annulment is to place the bankrupt back in the position as if there had been no bankruptcy. Most annulments occur following a sequestration order obtained by a creditor – for instance where the debtor was simply unaware of the petitioning creditor’s debt, can pay the debt and is otherwise solvent (an expensive process but perfectly achievable with good advice). [...]  READ MORE →

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Fighting the Wolf at the Door

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

Under section 467(1) of the Corporations Act 2001 (Cth) (“the Act”) the Court has discretion in a winding up application to:

  • Dismiss the application with or without costs, even if a ground on which the Court may order a company to be wound up is proved; or
  • Adjourn the winding up application hearing conditionally or unconditionally; or
  • Make any interim order it thinks fit.

In exercising its discretion, the Court’s attention will be directed to the public interest which usually dictates, in the absence of special circumstances, that an insolvent company be wound up to prevent it from incurring further debts.

In Reform Projects Pty Ltd v Macarthur Projects Pty Ltd [2022] NSWSC 672, Parker J (“Macarthur Projects”) considered an application to have the defendant company (“Macarthur”) wound up in insolvency after it had failed to comply with a statutory demand served by the plaintiff company (“Reform”). [...]  READ MORE →

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HOW MUCH DID THAT COST?

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

With any debt collection service, such as a debt collection agency or a debt collection lawyer, the costs of debt collection can be significant. So the question we are always asked is ‘Can the debtor be held liable for my debt collection costs?’

As we tell our valued debt collection clients, there are at least a couple of different answers to this question. But critically, debt collection clients can take steps to get a better outcome in relation to their debt collection costs! [...]  READ MORE →

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Creditor Bankruptcy Notices: What do I do if I receive one?

Creditor Bankruptcy Notices: What do I do if I receive one?

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

What is a Bankruptcy Notice?

The Bankruptcy Act 1966 (Cth) refers to a bankruptcy notice as a formal warning that is issued to a debtor who owes a creditor a minimum of $10,000 or more. This amount was permanently raised from $5,000 in January 2021.

The Notice requires a debtor to pay an amount within 21 days from the date it has been served. If they do not resolve the debt, the subject of the Notice within that 21 day period, the debtor has committed an ‘act of bankruptcy’, which the applicant creditor may rely upon in order to apply to the court for a sequestration order to be made against the debtor’s estate. [...]  READ MORE →

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CAN’T WE STILL BE FRIENDS? CUSTOMER RELATIONSHIPS AND DEBT COLLECTION

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

An effective debt collection system is critical to businesses who provide goods or services “on credit”. But how to go about debt collection whilst still trying to maintain good customer relationships?

In our experience, nothing poisons a business relationship like bad debt collection. At the risk of sounding heretical, sometimes the customer is not right, when they simply refuse to pay for no reason. The value of such customer relationship might be doubted, and the method debt collection may not matter. But in other cases, the customer just needs a gentle (or possibly less gentle!) debt collection technique. In all cases, the question is this: How does a business continue to manage a customer relationship whilst ensuring that their account is paid on time? [...]  READ MORE →

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OFFER UP!

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

Calderbank offers are based on the principles outlined in the English case of Calderbank v Calderbank [1975] 3 All ER 333. Whether you are the offeror or the offeree, it is important to understand the effect of these offers.

Calderbank Offer: What is it?

A Calderbank offer is designed to put the offeror in a position to apply to the court for an indemnity costs order, in circumstances when the offeror receives a better outcome than the amount that was offered. Should an indemnity costs order be granted, the unsuccessful party will pay a higher proportion of the successful party’s costs. Emphasis is placed on the word “higher”. In many civil jurisdictions (but by no means all), “costs follow the event,” and so the unsuccessful party might expect to have to pay some of the successful party’s costs. If ‘indemnity’ costs are awarded, the amount payable is higher. Somewhat  counterintuitively however, the amount is almost never “all” the successful party’s costs, for various reasons. However, in many cases the difference between recovering some costs, and recovering a much higher proportion of those costs, can make an enormous difference. And by making a Calderbank offer, a party will improve the chances of recovering a higher proportion of costs. [...]  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 →