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.

BACKGROUND

Mr Featherstone was recorded as director of Ashala Pty Ltd (Ashala) from 10 March 2004 to 7 October 2005 and from 28 November 2005 to 12 December 2005. Ashala occupied premises which Mr Featherstone owned as trustee for his family trust.

On 7 October 2005, Mr Featherstone agreed to transfer his shares in Ashala and two other related companies to Ms Kristy Marks and for Ms Marks to become the sole director of the three companies. This agreement was recorded in an “agreement letter” and ASIC was notified accordingly.

The Financial Crisis, a difficult market situation and a tense liquidity status have led to remarkable difficulties for mid-sized businesses within the past years. Strategic and financial investors have and continue to utilize these circumstances to acquire interesting distressed companies for comparatively moderate purchase prices.

In order to benefit from these circumstances, investors need to understand how to avoid or minimize the risks of liability related to such acquisitions.