Business Advisory & Insolvency

Our results driven Perth Business Advisory and Insolvency team is experienced in helping insolvency practitioners, directors and companies through difficult legal and financial times. We have successfully assisted a range of clients with:

  • General insolvency advice
  • Asset protection strategies
  • Restructuring
  • Payment arrangements
  • Exploring alternatives to Liquidation and Bankruptcy
  • Controlled descent into Liquidation or Bankruptcy
  • Negotiating with creditors and other stakeholders
  • Defending and settling claims by liquidators
  • Partnership / shareholder disputes
  • Postponing / defending winding up court hearings
  • Business sales
  • Securitisation
  • Introductions to financiers that can provide funds when banks won’t and other relevant business partners

Here are some examples of matters in which we have assisted clients, often working with our client’s other business advisors (including accountants) :

Holistic approach

We take a holistic approach to all of our matters. For example, for one of our mining services clients we :

  • Assessed their business and personal needs and goals.
  • Developed a strategy to achieve continuity of trade.
  • Appealed and settled a Construction Contracts Act dispute.
  • Negotiated with creditors to forbear from taking action to allow time to implement our strategy.
  • Negotiated with financial institutions and introduced our clients to financiers that were willing to lend when the banks weren’t.
  • Liaised with insolvency practitioners.
  • Continually reviewed and adjusted our strategy.
  • Reviewed existing contractual arrangements.
  • Assisted the director with the sale of the business, at market value, from one entity to another (including the taking-on of all accrued employee entitlements) allowing the director to continue to operate the business in the new entity, and avoiding cessation of trade, avoiding unemployment, avoiding damages claims by contractors for unfinished works, and maximising the return to creditors.
  • Engaged in various negotiations with Liquidator.
  • Negotiated payment arrangements on behalf of the director in respect of alleged guarantee creditors in order for the director to avoid bankruptcy.
  • Defended claims by liquidator including a demand for payment of a significant alleged director loan account in order for the director to avoid bankruptcy.

Asset protection strategies

We have advised a number of clients on the best trading structures to allow continuity of business and protect the family home against future insolvency events.

Assisting clients to sell their business at market value to third parties or related parties to avoid cessation of business

Many of our clients have a potentially viable business but have encountered unfortunate circumstances. For example, a major debtor has failed to pay an account, a director or key employee has fallen seriously ill, the business has grown at an unsustainable pace, the business hasn’t been proactive or reacted quickly enough to changes in the market.

In many cases these clients are able to carry on business on a smaller scale or under a different structure with our assistance. We assist our clients to sell their business, at market value, to a third party or a related party to avoid cessation of business, with the benefit of:

  • Continuation of employment for employees and transfer of employee entitlements.
  • Avoidance of major customer/client contract termination.
  • Appearance of “business as usual”.
  • Better return for creditors than would be achieved in liquidation.

Deconstruction and legitimisation of DIY transactions

We have successfully assisted numerous clients that have attempted a DIY restructure. For example, one client had transferred assets between three companies, in preparation of sale of one of the companies (that did not eventuate), and the accounts of the companies were a spider’s web of intercompany credits and debits.

We successfully:

  • Determined the intention of the parties at the time of the transfer of all of the assets.
  • Assisted our clients in obtaining retrospective valuations.
  • Formalised the sale of assets between the companies.
  • Formalised the vendor finance arrangements between the companies.
  • Formally assigned debts from one company to another.
  • With the assistance of the client’s accountant, determined the true position of the intercompany loan accounts and established that the vendor finance arrangements had been satisfied.
  • Assisted the directors to place one of the companies that had ceased trading into liquidation.

Controlled descent

There are some situations where Liquidation or Bankruptcy is inevitable. In those circumstances, we assist our clients by explaining processes and obligations, completing complicated paperwork and generally liaising with the Liquidator or Bankruptcy Trustee to ensure a smoother process.

ATO negotiations

We regularly deal with the ATO to obtain:

  • Agreement to forbear from taking further action (in one case for up to 6 months) to allow time for fund raising.
  • Instalment arrangements (even in circumstances where there have been previous defaults).
  • Remission of GIC and penalties.
  • Release from liability on hardship grounds.

Liquidator claims: defending and settling

We have successfully defended and/or settled a large number of claims by liquidators against directors including insolvent trading claims, preference claims and demands for repayment of drawing/loan accounts.

Payment arrangements

We have successfully negotiated numerous instalment arrangements, with the ATO and other creditors, including for one client that was able to avoid bankruptcy despite failing to lodge tax returns for 10 years, having at least one expired DPN and the ATO commencing Court action.

Securitisation

Often directors borrow money against their family home for use in the business. We can assist with:

  • Formalising existing director loans.
  • In some circumstances obtain security for existing loans.
  • Preparing loan agreements with security provisions prior to lending funds to the business.
  • Registration of security interests including by way of caveat or PPSR registration.

FAQ FOR STATUTORY DEMANDS

What is a statutory demand?

A statutory demand is a formal demand for payment of a debt owed by a company to a creditor. The demand is issued under the Corporations Act 2001 (Cth) (Act).

What are the eligibility requirements for issuing a statutory demand?

A statutory demand can be issued by a creditor if:

  • the debtor is a company registered under the Act;
  • the debt owed to the creditor is equal or greater than $4,000;
  • the debt is due and payable; and
  • there is no genuine dispute about the existence or amount of the debt.
What are the formal requirements for issuing a statutory demand?

The formal requirements for issuing a statutory demand include that:

  • it must be in writing in the correct form;
  • it must correctly identify the debtor company and the creditor;
  • it must require the debtor company to pay, secure or compound for the debt or apply to Court for the statutory demand to be set aside withing 21 days;
  • it must correctly and sufficiently identify and particularise the debt owing by the debtor company; and
  • it must be signed by the creditor.
How is a statutory demand served on the debtor company?

The service of the statutory demand is a vital step in the process, because if you incorrectly serve the demand, the Court may determine that the service has not been effected, and the consequences of this could be serious, including a costs order to be made against you.

A statutory demand may be served on the debtor company as follows:

  • by leaving it at, or posting it to, the debtor company’s registered address; or
  • by delivering it personally to a director of the debtor company.

The creditor will be required to file an affidavit of service with the Court if the creditor initiates proceedings for the debtor company to be wound up in insolvency.

Can a statutory demand be served electronically?

Yes, a statutory demand can be served electronically if the debtor company has agreed to electronic service or if the Court has made an order for electronic service (or any other form of substituted service).

How long does the debtor have to respond to a statutory demand?

The debtor has 21 days from the date of service of the statutory demand to either:

  • pay the debt;
  • secure or compound for the debt; or
  • apply to Court for the statutory demand to be set aside.
What are the grounds for a debtor to dispute the statutory demand and to apply to Court for it to be

The debtor may dispute the statutory demand and apply to Court for an order setting it aside if:

  • there are formal defects in the statutory demand;
  • there is a genuine dispute about the existence or quantum of the debt;
  • the debtor has offsetting claims against the debt; and / or 
  • there is some other procedural reason, like the statutory demand was not correctly served on the debtor.
What happens if the debtor fails to respond to the statutory demand?

If the debtor fails to respond to the statutory demand within 21 days, then it raises the legal presumption that the debtor company is insolvent and the creditor may apply to the Federal Court or the Supreme Court for the debtor company to be wound up in insolvency.

Can a statutory demand be withdrawn?

A statutory demand can be withdrawn by the creditor within the time limited by the notice if the debt is paid or if an agreement is reached with the debtor company to pay the debt. Once withdrawn by the creditor, the statutory demand will have no further force or effect.

If a debtor company owes you money and you wish to initiate proceedings (including issuing a statutory demand and commencing winding-up proceedings), feel free to contact Murfett Legal.

Our details are as follows:

Level 2, 111 Wellington Street, East Perth WA 6004
(08) 9388 3100
[email protected]

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