In brief - Well drafted trading and credit terms can help your company avoid bad debts

Seeking director's guarantees, following your credit policies and including recovery costs, interest clauses, general security and retention of title clauses in your trading terms can help you manage cash flow and prevent bad debts.

Company liquidation often due to poor management of cash flow

The reform agenda for Australia's restructuring and insolvency regime has now received the views of the Productivity Commission, in the context of its wider review of Business Set-Up, Transfer and Closure.  A draft report published on 21 May 2015 sets out a number of recommendations that, while mostly not new to the reform agenda, will be relevant to restructuring and insolvency professionals in the not-too-distant future.

The latest statistics on insolvency appointments (for the period January 1999 to March 2015) and companies entering external administration (for the period July 2013 to March 2015) have been released.

In Re The Bell Group Ltd (in liquidation); Ex Parte Woodings [2015] WASC 88 (Bell) Pritchard J found that section 548 of the Corporations Act 2001 (Cth) required:

In this case, the High Court held that the proceeds of the sale of timber and land under a timber plantation scheme were not held on trust for investors by the scheme operators, with the result that they were available to secured creditors of the scheme in priority to the investors.  In particular, the High Court found that a trust will not arise without clear intention by the parties, and a court will not infer a trust simply because it thinks it is an appropriate means of protecting or creating an interest.  When establishing a managed investment scheme, parties shou

The Court of Appeal of the Supreme Court of Victoria in Boz One Pty Ltd v McLellan¹ has recently confirmed that it will adopt a commercial approach to assessing the conduct of receivers. A private sale of charged assets will not necessarily breach s 420A of the Corporations Act 2001. A copy of the decision is available here.

Key Messages

You have done the work pursuant to the agreed terms of a customer service agreement ("CSA"). You should not have a dispute with your customer regarding what you have done and what you are entitled to be paid. However, they are not paying you or unable to pay you. What should you do to prevent this happening?

Security

WHAT HAPPENED?

On 4 February 2013, Stansfield DIY Wealth Pty Ltd (in liquidation) was wound up, and a liquidator was appointed. At that time, the only function of the company was acting as trustee of a self-managed superannuation fund. It had no assets or liabilities, save in its capacity as trustee of the super fund.

The High Court today granted special leave to the Commissioner of Taxation (Commissioner) to appeal against the decision of the Full Court of the Federal Court in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133. The appeal is likely to be heard later this year.

Significance

The High Court has granted special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd(in liq) [2014] FCAFC 133 which held that a liquidator is not required to retain funds from the proceeds of sale of an asset to pay tax before an assessment is issued.

Practical Implications