Tag: legal questions

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What is a liquidator?

What is a liquidator

A liquidator is a person appointed, in the winding up of a corporation, to assume control of the company’s affairs and to discharge its liabilities in preparation for its dissolution.  The appointment of a liquidator may be done voluntarily (by the proprietors) or via the courts (usually upon the application of a creditor – very often the ATO using a creditors statutory demand).

The process of the liquidator conducting the affairs of the company and realising its assets is called liquidation.

The liquidator’s role is to ascertain the liabilities (and assets) of the company, convert its assets into money, terminate its contracts, dispose of its business, distribute the net assets to creditors and any surplus (which is rare) to the shareholders and/or proprietors.

The liquidator will extinguish the company, lawfully, as a corporation on the records of ASIC by formal dissolution.

In determining the assets of a company, it is the liquidator’s duty to determine whether particular assets under the company’s control are owned by the company or others – i.e. stock may be purchased subject to a retention of title, vehicles may be on a corporate hire purchase and secured via a PPSR.

BAP can assist company directors to structure their assets and affairs, if not insolvent, in such a fashion to provide lawful asset protection.  To discuss how we can help to structure your company’s affairs and assets to provide maximum asset protection, please click here to book an appointment, call 1300-327123 (1300-DCP123), or complete the below form.

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What is insolvency?

Money calculations insolvency advice

Insolvency in general terms, as it relates to a corporation, is the inability to pay debts as and when they become payable.

A company is also insolvent if it is experiencing an ‘endemic shortage of working capital’ as opposed to a temporary lack of liquidity.

Determining the difference at a point in time during the corporation’s life is a question for a court to determine .

Indicators of insolvency include:

  • continuing losses,
  • no access to alternative finance,
  • the inability to raise further equity,
  • special arrangements with selected creditors,
  • solicitors’ letters or judgments issued against the company,
  • overdue taxes,
  • failure to keep books and records, etc.

The list is indicative and not exhaustive.

Companies experiencing any or all the above indicators should book a free consultation by clicking here then where we’ll provide you with company specific advice re insolvency in your instance.  Alternatively call us on 1300-327123 (till late) or complete the form below.

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What is a creditors statutory demand?

The Corporations Act 2001 (“the Act”) provides for the conducting of business by a corporation in Australia.

Section 459E of the Act provides that a corporation may be served a statutory demand by a creditor (i.e. a creditor’s statutory demand) relating to (subsection 1):

                     (a)  a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or

                     (b)  2 or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum.

 

Once served with such a demand, a company cannot ignore the demand.  The most serious of possible consequences for the company are now rolling out.  There are no friendly rules or casual arrangements, strict compliance with the demand is necessary by law.

Requirements

 

There are further other requirements such as:

             (2)  The demand:

                     (a)  if it relates to a single debt–must specify the debt and its amount; and

                     (b)  if it relates to 2 or more debts–must specify the total of the amounts of the debts; and

                     (c)  must require the company to pay the amount of the debt, or the total of the amounts of the debts, or to secure or compound for that amount or total to the creditor’s reasonable satisfaction, within 21 days after the demand is served on the company; and

                     (d)  must be in writing; and

                     (e)  must be in the prescribed form (if any); and

                      (f)  must be signed by or on behalf of the creditor.

             (3)  Unless the debt, or each of the debts, is a judgment debt, the demand must be accompanied by an affidavit that:

                     (a)  verifies that the debt, or the total of the amounts of the debts, is due and payable by the company; and

                     (b)  complies with the rules.

 

The key words above in each of the subsections are the words Must and AND.

The above requirements of the Act’s provisions are cumulative.

Skip any of the requirements and the consequences for the creditor’s demand is that it is potentially defective.

What happens next

Once a creditor’s statutory demand has been served upon a company, several things can happen:

  1. the recipient company pays the debt in full
  2. the company contacts the creditor and they negotiate a settlement
  3. the company applies to have the demand set aside – for instance if there has been a genuine disputing of the debt.
  4. the company does not respond, and the creditor applies to have it wound up

Next steps

If your company has received a creditor’s statutory demand, you have no time to waste.  Go straight to our “what to do next blog” for further next steps – click here to book a free appointment, call us on 1300-327123 or complete the form below.

To view related blogs, follow the following category links and tags below.

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Fixtures

It might seem like a question with an obvious answer, but what is a fixture? What is a fitting?  And, what is equipment?

We are presently working on a project where our client is claiming title to commercial equipment.  The equipment was placed in a function space which features elsewhere in our blogs – current projects & past projects.  The land has recently been sold by the mortgagee in possession.

In the last couple of days these questions have arisen:

  • what is a fixture?
  • who can have title to it?
  • can a person abandone title to goods? and,
  • what is required to secure title to the fixture/s?

In this instance the equipment is commercial kitchen equipment.

Background

The purchaser from the mortgagee seems to be suggesting in correspondence that portable equipment is nevertheless a fixture.

The implied threat is to abandone the purchase from the mortgagee unless the secured lender, who owns the equipment, waives their title?

The answer to these questions is this. 

 

Analysis

Typically a fixture is a chattel which is annexed to land in such a way that it becomes ‘part of’ the land and ceases to be the personal property of the person who attached it.

Have a think about your workspace.  What are some chattels and what are fixtures and what might be fittings.

Take the kitchen sink for instance.  It’s probably quite impractical to remove that.  It would perhaps rip off the tiles in the process.  But what about for instance shelving.  Sure the shelves are screwed into the wall, and so it might be argued that they become part of the land.  But do they cease to be personal property?  And why were the shelves put there in the first instance?

These are all relevant questions in considering what are fixtures and what aren’t.  

We may discuss fixtures in further detail as this dispute is worked through.  

If you have any thoughts or comments or questions, please feel free to direct message me at:  [email protected] – thank you.

14 August 2018