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Two Personal Debt Solutions compared to Bankruptcy

If you want to avoid Bankruptcy, then it is best to look for an alternate personal insolvency solution. Here at CRS Insolvency Services, we offer two personal debt solutions which are both worth considering, depending upon your personal circumstances: Debt Agreements and Personal Insolvency Agreements.

Debt Agreement

A Debt Agreement is a formal arrangement between you and your unsecured creditors. We help to negotiate a payment plan in which you propose to pay a certain amount of a period of time. It usually lasts for 3 to 5 years.

The good thing about a Debt Agreement is that creditors will usually accept less than 100 cents in the dollar meaning that you will have to pay less than the total debt. Any remaining balance after the Debt Agreement expires will be written off and no debt recovery action is allowed to be made against you for that amount.

All your debts will be consolidated into one debt so you only have to make on regular payment. Depending on your proposal, this could be weekly, fortnightly or monthly. All interest on your debts will also be frozen and you assets will be protected, meaning you won’t lose them.

Personal Insolvency Agreement

A Personal Insolvency Agreement (PIA) is very similar to a Debt Agreement. Likewise, with a Debt Agreement, a PIA is an arrangement with your creditors in which you pay an agreed sum over 3 to 5 years (usually).

It also means that any interest on debts will be frozen and the remaining balance at the end of the agreement is legally written off.

However, if you:

  • Earn more than >$83,169 (after tax) or >$116,117 (before tax for Australian citizens).
  • Owe more than a total of $110,893
  • Own assets worth more than $110,893 combined

Then you will need to enter into a PIA instead of a Debt Agreement.

To enter into a Debt Agreement, you will need to earn, owe and own less than the amounts stipulated above.

Compared to Bankruptcy

Assets

Under bankruptcy you will most likely lose your assets (unless they are under the statutory limits), whereas with a Debt Agreement or a Personal Insolvency Agreement your assets will be protected.

Income

Under bankruptcy, your income will be assessed annually for compulsory income contributions (link to https://crsinsolvencyservices.com.au/income-contribution-calculator/), whereas with a Debt Agreement or a Personal Insolvency Agreement or income will not be assessed annually and your repayments under each agreement will not change if you get a pay rise.

Contact CRS Insolvency Services on 1800 210 073 to speak to one of our friendly and professional insolvency specialists today.

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Australian Insolvencies Are Set to Increase by 2% This Year. Here Is Why to Avoid Being Part of Those Statistics

It’s bad news for Australian businesses as it is predicted that the number of insolvencies will increase this year.

 

According to Atradius Economic Outlook, there will be a 2% increase in insolvencies, meaning that Australians will be on par with the UK and Canada.

 

In order to avoid being part of the 2% of Australian businesses becoming insolvent, make sure that you keep a close eye on your business’ performance and cashflow. Also, learn to recognise these signs that your business is insolvent or likely to become insolvent.

 

  1. You cannot pay your debts

 

Being insolvent is defined as being “unable to pay your debts as and when they fall due” so if you find that you are struggling to pay your bills one time, then you may already be insolvent.

 

  1. Not paying superannuation fees

 

One of the first go-to sources of money for companies who cannot pay their bills is the employees’ superannuation. This is because these payments are only made quarterly so missed or late payments may go unnoticed.

 

Whilst not paying your employees’ superannuation will help to improve short-term cash flow, it is not solving the core problem of your company’s underlying financial situation. Directors who fail to pay their employees’ superannuation will also become personally liable for the unpaid superannuation.

 

  1. COD terms

 

If your suppliers and vendors are starting to put implement Cash-on-Delivery, then that demonstrates that your suppliers have acknowledge of or suspect that your company is insolvent. If others are starting to recognise it, then you should act immediately and seek professional help.

 

CRS Insolvency Services are the leading corporate insolvency specialists in Australia. We offer 24/7 expert advice on our toll-free helpline. If you would like to speak to a professional, then please call us on 1800 210 073.

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Ozcon Industries Shuts down, Leaving 81 Workers Jobless

81 workers have lost their jobs at Ozcon Industries, with the business shut down after it was placed in voluntary liquidation earlier this year.

 

Ozcon Industries, a steel pipe and welding services supplier, had four sites based in Dalby, Miles and Moomba in Queensland. This family-run, award-winning business had been operating for more than a decade, making an annual turnover of approximately $17 million in the June 2016 financial year.

 

However, due to “significant losses on a number of specialised welding projects” in addition to “the drilling industry downturn across the Australian energy sector”, the company was placed in voluntary administration at the request of the company directors and shareholders.

 

As Ozcon Industries employed many local residents, this will no doubt affect the community.

 

Bill Bryne, Acting State Development Minister, commented, “My message to these workers and their families is: you are not alone.

 

“Ozcon Industries is a private company that makes its own commercial decisions, but government has a critical role to play in times like these.”

 

He also stated that the Government had arranged for Centrelink to provide financial support to the affect families as well as counselling through Lifeline.

 

David Littleproud, a Federal member for Maranoa, echoed this sentiment, stating that he has “alerted human services minister Alan Tudge to make sure our local Centrelink office is fully equipped to also assist those affected.

 

“Ozcon Industries specialised in industrial, mining and resources based-manufacturing and the Federal Government have some large-scale projects in the works. Whether it’s the Warrego highway upgrade or the Toowoomba second range crossing, I’ll work to get these fast-tracked to support those affected by this business closure and get people back into local work.”

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Will I Be Personally Liable for Company Debts?

One of the most common questions business owners or directors ask us is “will I be personally liable for company debts?” There is a reason why this question is asked so often. It is because if a company director is found to be personally liable for debts of their business, then he or she may face serious consequences.

If your company is insolvent or likely to become insolvent, then the company, not you, will become liable to pay the company debts.

In addition, if you, as the company director, have failed to pay your employee’s PAYG withholding and Superannuation Guarantee payments, then you will be personally liable for these company debts. You may also be issued with a Director Penalty Notice ((DPN) by the Australian Taxation Office (ATO). If you have received a DPN, then you must act immediately. You have 21 days to respond appropriately and pay the company debts or the Commissioner of Taxation will hold you personally liable and can face criminal and civil penalties. If you can’t pay the debts you may wish to appoint a liquidator within the 21 day period.

If you are worried that you will become personally liable for company debts, then it is recommended that you speak to a professional for expert advice. CRS Insolvency Services are insolvency specialists who specialise in corporate insolvency appointments. We will provide free, expert advice that is unbiased and based on years of experience. If you would like to seek a free initial consultation, then please contact us on 1800 210 073.

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I’ve Received a Director Penalty Notice. What Does This Mean?

A company director is obliged to pay their employee’s Pay As You Go (PAYG) withholding and Superannuation Guarantee Charge (SGC). It is a director’s legal responsibility to ensure that these obligations are met.

 

However, when a director runs into financial difficulties, then it is common practice that they delay these payments to improve short-term cash flow. These payments are usually made quarterly so it takes time for people to notice that they have not yet been paid.

 

It is important for company directors to know that this can cause them to become personally liable for these payments. This is where a Director Penalty Notice comes into play. If you have not met your legal obligations to pay these amounts, then the Australian Taxation Office (ATO) may issue a Director Penalty Notice (DPN) to the director’s residential address as registered with the Australian Securities and Investments Commissions (ASIC). For this reason alone, it is critical that company directors always keep their residential address details up to date with ASIC, otherwise a DPN may be issued and you will never know about it!

 

A Director Penalty Notice carries serious consequences and so it is important that you take action immediately. You have 21 days to respond from the date the DPN was issued by the ATO and there are different steps that you can take.

 

  1. Pay the full debt; or
  2. Enter an installation arrangement to pay the debt; or
  3. Place the company into Voluntary Administration; or
  4. Place the company into Liquidation.

 

If you have received a Director Penalty Notice and fail to respond appropriately within the 21-day timeframe, then you will become personally liable for the amount stipulated in the DPN notice.

 

To avoid being made personally liable, then please act immediately if you have received a Director Penalty Notice. If you have received one and want professional advice about what to do, then please contact CRS Insolvency Services on 1800 210 073. Our toll-free hotlines are open 24/7 so there will always be someone available to help you.

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The 3 Advantages of Voluntary Liquidation

Liquidation refers to the act of winding up a company’s affairs whereby, in most cases, trading ceases. However, there are different types of liquidation: involuntary liquidation and voluntary liquidation.

 

Involuntary liquidation means that the company has been issued with a court order to be wound up, while voluntary liquidation is when a company director willingly applies for it to be wound up. While some people may prefer to wait until they are forced to close down their business, there are benefits to voluntary liquidation which can make it the preferred business solution for some.

 

  1. You can choose the liquidator

A major benefit of voluntary liquidation is that you can choose who will be appointed as the Liquidator of your company as opposed to an involuntary liquidation in which the court will appoint one on your behalf or the creditor apply to the court will nominate a liquidator of their choosing.

This means that you can take the time to do your research and choose a liquidator who you feel most comfortable being in charge of the liquidation of your company. This can make a big difference to your experience in this process.

 

  1. You are protected from personal liabilities

Choosing to voluntarily liquidate your company means that you recognise that your business is insolvent and that you have taken the appropriate steps in ensuring that the company’s best interests are met. Voluntary liquidation can help prevent you from being further responsible for debts which you may become personally liable to pay if you don’t cease to trade.

 

  1. You get a fresh start

We understand that it can be a tremendously difficult decision to voluntarily liquidate your company. However, voluntary liquidation can bring you a peace of mind. It can help you to see the end of a long and stressful time, and give you the space you need to begin the next chapter of your life.

 

CRS Insolvency Services are highly experienced in assisting insolvent companies to explore business debt options such as voluntary liquidation or voluntary administration . If you are concerned about your business’s solvency, then please speak to one of our friendly and professional debt consultants for 24/7 free expert advice on 1800 210 073.

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Benefits of Voluntary Administration

CRS Insolvency Services offers Voluntary Administration services for any company which is insolvent or is likely to become insolvent. Once the appointment is made, the administrator assumes control over the company and will become responsible for investigating the financial affairs and to recommend the next course of action to creditors, whether that be for the company:
• To enter into a Deed of Company Arrangement (DOCA); or
• To enter into Liquidation; or
• To hand back the control to the directors.

 
Benefits of Voluntary Administration: Takes away the risk of insolvent trading

If a company continues to trade while insolvent there are serious risks to the company’s directors and they may face criminal or civil penalties. If you appoint a voluntary administrator and then propose a DOCA which is accepted by creditors, the directors will avoid any claim for insolvent trading.

 
Benefits of Voluntary Administration: A moratorium is established over company debts

The appointment of a voluntary administrator will create a moratorium for a period of at least 30 days and possibly longer if the administration period is extended. This will provide valuable time to formulate a successful DOCA proposal without the stress of dealing with creditor demands.

 
Benefits of Voluntary Administration: A second chance

The appointment of a voluntary administrator will provide the directors and the company with a second chance. If the creditors accept your DOCA proposal then the control of the company will be returned to the directors and you will be given a second chance.

The appointment of a voluntary administrator is a serious step and you should not take this step without obtaining professional insolvency advice. At CRS we offer the first meeting free of charge.

If you are considering appointing an administrator you should contact us on 1800 210 073. Our insolvency hotline is open 24 hours 7 days a week.

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What Is Company Receivership?

Company receivership is when a receiver is appointed by a secured creditor to assume control over the company. Their purpose is to collect and sell the company’s assets in order to repay the debts owed to the secured creditor. The receiver will sell the assets for the benefit of the secured creditor at a price equivalent to its market value; if an asset does not have a market value, for the best price reasonably obtainable having regard to the circumstances existing when the asset is sold.

 

In a receivership, the appointed receiver’s duty is to this secured creditor, and as such, their position may include selling the ‘whole business’ as an ongoing concern.

 

The appointed receiver must report any possible offences that they observe in the business to the Australian Securities & Investments Commission (ASIC). They must also provide a detailed list of receipts and payments for the receivership to ASIC.

 

Can a company still trade even if it has entered into a receivership?

 

Receivership differs from liquidation in that the company can still continue to trade. In addition, the company director may still be in control of the business, though their powers may be limited depending on the situation and the amount of influence that the receivership has. This is what make receivership different from other forms of external administration.

CRS are experts in the field, and can help you to understand and work through any aspect of corporate insolvency, such as receivership. If you would like to find out more information about company receivership, then please contact us for free and confidential advice on 1800 210 073.

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What is a Director Penalty Notice?

Are you a company director who has recently received a Director Penalty Notice? Are you afraid of being held personally liable for your company’s debts? Then you need to learn more about the Director Penalty Notice and how it may affect you personally.

What is a Director Penalty Notice?

A Director Penalty Notice (DPN) is issued by the Australian Taxation Office (ATO). The ATO has the power to hold directors personally liable for any outstanding tax payments under certain circumstances.

What happens if you have received a Notice?

If you have received a notice, you must act immediately. You have 21days to act and put into affect one of the following four alternatives:

One. Pay the full debt.

Two. Enter into a formal repayment plan with ATO. If you chose this option, and the company later breaches the repayment plan, you will become personally liable for the full debt.

Three. Place the company into voluntary administration

Four. Place the company into liquidation.

If the company director fails to implement one of these options within the 21 day period, then the director will become personally liable for the amount stipulated in the Notice.

In order to know which course of action is most suitable for your company, you need to consult with an insolvency specialist. At CRS Insolvency Services, our consultants are all highly trained in corporate insolvency assignments. We will provide professional advice to help you make the best decision for your company while avoiding personal liabilities. Contact CRS Insolvency Services on 1800 210 073 for 24/7 free expert advice now.

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6 Warning Signs of Corporate Insolvency

As a business owner, it is important that you are able to recognise signs that your company may be insolvent, or on the way to becoming insolvent. Here are 6 warning signs of corporate insolvency that you must look out for.

  1. Cash on Delivery becomes a common phrase

If you are facing corporate insolvency, then your creditors and suppliers may begin to ask for Cash on Delivery (COD). This means that you must pay them when you receive the supplied goods and services, as opposed to being trusted to be able to pay them at a later date. Insolvency can affect your credit with suppliers and ability to maintain long-term relationships with them.

  1. Dishonour fees, bounced cheques

If the cheques that you are sending out are bouncing, then this is a clear sign of corporate insolvency, as it shows that there are insufficient funds in your account. This also rings true for dishonour fees.

  1. Books and records are not updated

One of the signs of corporate insolvency is out-dated books and records. As businesses run into financial distress, directors are less likely to maintain their books, as their focus will most likely be elsewhere. It is crucial that financial records are maintained, as failure to do so, under the Corporations Act, gives way to a statutory presumption of insolvency.

  1. Superannuation contributions are not paid

Business directors and owners who are experiencing financial distress often use their employees’ superannuation funds to help with short-term cash flow. This is because these payments are normally paid at the end of every quarter, so it is less noticeable if they are overdue.

It is important to note that under the Director’s Penalty Notice regime, if a director is unable to pay their employees’ superannuation fees, then they may be held personally liable for them.

  1. Business aesthetics are not maintained

One of the first aspects of a business to be affected by corporate insolvency is its aesthetics. If your business’ physical appearance has dropped or there are signs of poor maintenance and cleaning, then this could be an indication of poor financial health.

  1. Legal action

The tipping point for most companies at the risk of corporate insolvency is having legal action taken against them, such as receiving a Director’s Penalty Notice or winding-up application. These can bear serious consequences, such as being made personally liable for company debts.

If you are facing corporate insolvency, then you need to take action immediately. Please contact CRS Insolvency Services for free, 24/7 expert advice on 1800 210 073.

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