How Does the ATO Fund Liquidation Claims?

How Does the ATO Fund Liquidation Claims?

Estimated reading time: 7 minutes

In this article we explore the circumstances under which the Australian Tax Office (ATO) will fund a liquidator’s claims. The take-away is that the ATO doesn’t necessarily fund on purely commercial considerations (unlike a private litigation funder) and so it is impossible to predict whether a liquidator will be funded by the ATO until the funding arrangement is already agreed upon.

Liquidator fraud recovery using Barnes v Addy

Liquidator fraud recovery using Barnes v Addy 

Estimated reading time: 6 minutes

If a liquidator is appointed to an insolvent company, and believes assets have been depleted due to fraud, what can they do? Even if the crime of fraud can be proven, this does not necessarily aid the liquidator in recovering assets. Here we look at the option for liquidators to use the concepts of ‘knowing receipt’ and ‘knowing assistance’ established in the 19th century English case of Barnes v Addy to recover from third parties in cases of fraud. It is a difficult claim to defend because it is vague and open to broad interpretation when a director fails to keep adequate books and records before winding up.

‘Retention of Title' Claims during liquidation

Can a Liquidator Ignore ‘Retention of Title’ Claims and Keep Inventory when a Business is put into Liquidation?

Estimated reading time: 6 minutes

Many businesses supply goods to other businesses on credit. In many cases, this inventory is covered by a so-called ‘Retention of Title’ clause in favour of the supplier. Here we assess the consequences of liquidation on a Retention of Title claim, the impact of the Personal Properties Securities Act 2009 (Cth) and whether a liquidator might ever be permitted to ignore such a claim (the answer, generally speaking, is no – they cannot ignore it).

Are Directors' Salaries ‘Voidable Transactions’ in a Winding Up?

Are Directors’ Salaries ‘Voidable Transactions’ in a Winding Up?

Estimated reading time: 5 minutes

Directors often fail to pay themselves a salary before winding up. Instead, many small and medium-sized enterprise (SME) directors pay themselves throughout the lifetime of a company by withdrawing cash that is accounted for in a company loan account. In doing so, directors often seek to delay the payment of the income tax (PAYG) that they would have to pay if they drew a salary.

Who should be the architect of a turnaround?

Who should be the architect of a turnaround?

Estimated reading time: 6 minutes

Small-to-medium sized business owners can’t effectively outsource the responsibility for driving a turnaround process when their business is in financial trouble. They can hire sensible staff and competent professional advisors but they are the only people with the incentive (skin in the game) and experience (because they started the business) to drive forward a turnaround process.

How to select the right liquidator for an insolvent business

Selecting the right liquidator for an insolvent business

Estimated reading time: 7 minutes

Once a director (or directors) has made the decision that a liquidator be appointed due to insolvency, who should they appoint? It is crucial that directors engage a sensible, experienced and practical (ie. commercially-minded) liquidator.

How is the liquidator founded

How Do You Work Out if a Liquidator Is Funded?

Estimated reading time: 6 minutes

If you receive a letter from a liquidator demanding tens or even hundreds of thousands of dollars as part of a liquidation process, what do you do next? 

What Is an Unreasonable Director-Related Transaction?

What is an Unreasonable Director-Related Transaction?

Estimated reading time: 7 minutes

In this article we explain when a transaction might be voidable under that section, how these transactions differ from another type of voidable transaction, uncommercial transactions, and how liquidators pursue claims under this section.

What Is an Uncommercial Transaction?

What is an Uncommercial Transaction?

Estimated reading time: 6 minutes

Liquidators have a set of powers under the Corporations Act 2001 (Cth) (the Act) known as ‘voidable transactions’ (sometimes also known as ‘avoidance provisions’), which allow the liquidator to ‘claw back’ certain transactions in the case of an insolvent winding-up.

Inside problem or an outside problem

Business Survival Series: Is the problem an inside problem or an outside problem?

Estimated reading time: 5 minutes

Running a business can be tough and no matter how prepared you are, there will always be hurdles along the path. As such, recognising the type of problem that you’re dealing with is vital in determining what strategy should be implemented to respond to a financial crisis. A helpful starting point is to consider whether the problem is an inside problem or an outside problem.