Federal Parliament introduces new Safe Harbour Laws

The Australian Government passed new Safe Harbour Laws in September 2017 which will soften the current harsh insolvent trading laws.  The current insolvent trading laws are designed to protect creditors from when a company director knowingly continues to trade when the company is insolvent. The purpose of the Safe Harbour Laws is to give company directors protection from “insolvent trading” so they can trade on with confidence without the risk of becoming personally liable for insolvent trading.  The new Safe Harbour laws do not remove the current insolvent trading laws, as they will remain, however if a company director successfully implements a Safe Harbour plan then they will not be personally liable for any insolvent trading claim if the company later becomes insolvent.

To be protected under the Safe Harbour Laws the director’s plans must reasonably lead to a better outcome for the company’s creditors as a whole.

So what do you need to do to have a better outcome?

Company directors will also need to seek professional advice from a suitable qualified professional to ensure that the Safe Harbour plan will lead to a better outcome. Whilst the legislation doesn’t define who is a suitable qualified professional, practice would suggest that they may be an accountant or solicitor who has experience in insolvency.

If you would like to stay informed about the latest insolvency news, our team of experts here at CRS Insolvency Services are always ready to help on 1800 210 073. Our toll-free hotlines are open 24/7 so there will always be someone available to help you.

What Are Safe Harbour Laws?

The Safe Harbour legislation was passed on Tuesday 12th September 2017 allowing company directors to trade while their company solvency is still questionable. The legislation does not remove insolvent trading laws but once a director enters a ‘safe harbour’, they are no longer personally liable if they to produce a better outcome for the company and creditors. In other words, the new legislation is a licence to be insolvent whilst inside the harbour.

Limitations

There has been criticism that the laws cause directors to limit personal liability by prematurely seeking the appointment of a voluntary administrator in circumstances where a company is still viable. This goes against the original purpose of the voluntary administration regime.

The safe harbour cannot be used by a director where the company failed to maintain proper books and records, failed to pay employee entitlements when they fell due or failed to file documents as required by taxation laws. The safe harbour does not apply where such failure was not in compliance with these general requirements, or there was more than one failure in the preceding 12 months. As a director, they will still be liable for a breach of directors’ duties or failing to comply with any applicable continuous disclosure obligations.

Moving Forward

The operation of the safe harbour laws will change the way that directors handle a company’s solvency issues. These changes will encourage directors to think about how they can attempt to restructure or turnaround the company without the concern of being held personally liable for company debts incurred at or after this time.

Seek professional advice

You should seek professional advice immediately if your company is heading towards voluntary or involuntary company liquidation. Contact the 24/7 CRS Insolvency Services toll free hotline on 1800 210 073 to receive free and impartial company liquidation advice today.

Can a Wind Up Application be Revoked?

A winding up notice is usually issued by a creditor who wants to enforce their unpaid debt by having the company wound up and a liquidator appointed. Once a winding up notice has been issued it is very difficult to have one set aside.  If a winding up notice has been issued and the company wants to oppose the application, the company will firstly need to pay the petitioning creditor’s debt (prior to the court date) and secondly the company will need to prove to the court that the company is solvent and can pay other creditors.

Opposing a wind-up notice

As mentioned above, if the company wishes to oppose the winding up notice, the court will most likely need the company to put on evidence (usually in the form as an expert accounting report) demonstrating that the company is solvent and can pay all creditors as and when the debts fall due. If the court is satisfied with this evidence and the company has paid the petitioning creditor’s debt in full, then the court may dismiss the winding up application.

How to avoid being issued with a windup notice

Before receiving a wind up application the company should have received a creditors statutory demand.  If you receive a creditors statutory demand, the company will have 21 days to either pay the debt or apply to court to have it set aside.  If the company ignores the demand and does not file an application in court within the 21 day period, then the debt will be assumed to be owing. The creditor will rely upon this default in its winding up application.

What happens if I do nothing?

If you receive a wind up application and you don’t do anything, the court will assume that the company is insolvent and will appoint a liquidator at that hearing.  The petitioning creditor usually nominates a liquidator of their choosing.  After you receive a wind up application it is too late to appoint a liquidator of your choosing.

Seek professional advice

If your company is heading towards voluntary or involuntary company liquidation, you should seek professional advice immediately. Contact the 24/7 CRS Insolvency Services hotline on 1800 210 073 to receive free and impartial company liquidation advice today.

New insolvency law reforms. What does this mean for you?

The government introduced new Safe Harbour laws and a restriction on the enforcement of ipso facto rights. How will this affect you?

The Safe Harbour offers company directors protection from personal liability for insolvent trading. This protection will only be available if the company director puts in place a suitable plan and engages a suitable advisor to oversee and help implement the turnaround plan. Also to be eligible the company needs to be up to date with its taxation liabilities and lodgments.

If he plan is properly documented and supervised by a suitable advisor the director will not be personally liable for insolvent trading if the company later fails and goes into liquidation.

The ‘ipso facto’ reforms aim to limit counterparties from exercising contractual rights as a result of the company entering into administration, a scheme of arrangement or receivership (for example this should stop a landlord from cancelling a lease just because the company has gone into administration). The new ipso facto laws will not be retrospective.

The government is also considering a new system whereby they will introduce a director Identification Number regime, which will allow government agencies to monitor directors across different government databases. This will help government agencies tackle anti phoenixing.

If you would like to learn more about company liquidation, then please contact CRS Insolvency Services on 1800 210 073 to speak to our friendly and expert insolvency specialists.

Can I start a new business after liquidation?

You may think that as a director of a failed company that it isn’t possible for you to start another company any time soon. You can start a new company and act as the director, however, there are some important things you should know before venturing into your next business in order to be prepared and avoid any other forms of insolvency down the track.

ASIC does have the right to disqualify you from acting as a director of a company if within the last 7 years you have been a director of 2 companies that have gone into liquidation and your creditors have received less than 50c on the dollar. This simply means that for every dollar you owe to your creditors, they have received less than 50c. If ASIC feel this is necessary, the disqualification may last up to 5 years. Disqualification can even reach a maximum of 20 years but more modest disqualifications are most likely.

In order to avoid any form of director disqualification, it is best to understand and evaluate what happened with your previous business that led to its insolvency. It is important to be aware that ASIC maintains a register of companies which have been placed into liquidation and the liquidation many also appear on your personal credit file.

To find out more about your options as a director, 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.

The Answer to Your Director Penalty Notice

As a director embarking on a new business venture, you become assigned a number of
responsibilities. One of the most important is becoming responsible for your company’s taxation obligations.

But what does this mean?

Every Australian business has a legal responsibility to file its Business Activity Statement (BAS) every quarter. If you fail to lodge your BAS within 3 months of its due date, then the company director(s) will become personally liable for the PAYG and superannuation component. To collect these amounts from the director (personally), the Australian Taxation Office, has the power to issue a Directors Penalty Notice (DPN) with a lock down notice.

If your company has lodged its BAS within 3 months of their due dates and the
ATO issues a DPN, then you can avoid personal liability if within 21 days you
either:
– Repay the company’s full outstanding tax debt from their own pocket; or
– Appoint a liquidator to cease company operations; or
– Appoint an administrator to enter the company into voluntary administration.

In order to know which course of action is most suitable as a director, 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.

https://crsinsolvencyservices.com.au/what-is-a-director-penalty-notice

What Investigative Powers Does a Liquidator Hold?

When a company goes into liquidation, the appointed liquidator in charge has to complete a minimum level of investigations to determine whether or not there are assets to be recovered for the benefit of creditors.

The liquidator must then compile his or her findings into a report to the Australian Securities and Investments Commission. This is a statutory requirement as stipulated under s533 of the Corporations Act.

Some of the investigations the liquidator must carry out include:

The company’s history
Why the company failed
Report the claims of employees, secured creditors and nature of the debts incurred
If the company traded whilst insolvent
Whether the directors have committed any offences under the Corporations Act and any other possible claims against them
Whether or not the director made any preferential payments to creditors that may be recovered
Whether the director has been involved in a liquidation previously
Whether the liquidator believes that the director should be banned from acting as a director

In addition to these investigations, the liquidator holds other responsibilities such as collecting and realising the company’s assets, overseeing the distribution of the proceeds of realisation and applying for the company to be deregistered once the liquidation process is completed.

If you would like to learn more about company liquidation, then please contact CRS Insolvency Services on 1800 210 073 to speak to our friendly and expert insolvency specialists.

CRS Insolvency Services are expert insolvency specialists who have years of experience in helping businesses find the most appropriate insolvency solution for them.

So if you are struggling with your company debts, we would like to help you too.

1. FREE initial consultation

At CRS Insolvency Services, we understand that it can be difficult making the first move to help solve your insolvency issues. This is why we offer a FREE initial consultation for everyone who calls our toll-free, 24/7 hotline (1800 210 073). We also offer a FREE initial meeting at our head office in Sydney. If you elect to call our hotline you may wish to remain anonymous until you decide to proceed with a service we offer.

We do this because we want to make sure that we can help and steer you in the direction that is best for you before you make any commitments.

When you call us, you can expect expert advice that is tailored to your situation based on years of experience and knowledge. And everything that is said in the phone call will remain confidential.

2. Find the right option for you

If we believe that we can assist your with your company insolvency, we will explain each of our business debt solutions so that you can gain a thorough understanding.

That way, you can make an informed decision as to which one is the best option for you.

And of course, we will help you make this choice as it can be a very difficult and daunting decision to make.

3. We will see your case from the beginning to end

Once the best business debt solution for your company is identified, we will begin the process in helping you with your company debts with that solution.

We will see your case from beginning to end so you know that you will be working with someone that is familiar with your situation and that you know and trust.

If you are struggling with your company debts, then act immediately. Contact CRS on our 24/7, toll-free hotline for FREE expert advice on 1800 210 073.

Dairy Farmers are owed millions of dollars after National Dairy Products (NDP), a Victorian milk broking business, collapsed and went into administration in November 2016.

Creditors are also owed $6.8 million, with allegations that the company was trading whilst insolvent for several months prior to entering administration.

The company’s director Mr Esposito offered creditors $200,000 under a Deed of Company Arrangement (DOCA), to be shared between non-dairy farmer creditors owed money.
Alternative deals were offered to dairy farmer suppliers. They were offered either the full repayment of the book value of what they were owed over 12 months if they supplied the company with milk or full repayment over 18 months if thy suppliers refused to supply the company with further milk supply.

The dairy farmer creditors rejected the deal, saying it was not credible or practicable. Creditors instead voted to wind up the company and place it into liquidation.

The ABC has reported that the directors continue to live in a multi-million-dollar mansion in Melbourne and a luxury lifestyle to suit it – and dairy farmers are not happy.

The liquidators have said that they will now look to publically examine the directors or former directors and will look for any possible recovery action against the directors and former directors.

If you find that your company is in financial trouble, act immediately before it is too late. Contact CRS Insolvency Services for more information on our business debt solutions on 1800 210 073.

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.