Knowledge

The Personal Property Securities Register is a great tool for parties who lend money, supply goods on account or enter into asset leases. However, one common problem is the laziness of lenders or suppliers in perfecting their security interest.

Consultant Conrad Liveris released a report, based on the annual reports and websites of ASX200 companies, identifying commonalities and norms in the educational and professional experiences of CEO's. According to his analysis, the CEO candidate pool has remained narrow (despite the fact that business is increasingly global) and the pathway to become CEO has likewise remained narrow and has changed little over time. The report questions, in the context of increasing community expectations of Australian business, whether businesses should consider revisiting their approach to ensure they are recruiting the best available talent rather than sticking with the familiar.

The Sydney property market has seen enormous growth. The median price has risen by some 412% in the past 25 years. Pegged to this has been the growth in certain industries such as trades and services or manufacturing.

Currently there are 2,672,325 companies registered in Australia, therefore meaning that there at least 2,672,325 company directors in Australia. Fundamentally, the role of a director is a fiduciary in relation to the company. That means that they have a responsibility to place the companies interests before their own.

In our previous article, “What is a Statutory Demand?” we outlined what a statutory demand is and the high-level impact of not complying with it according to the Corporations Act 2001 (Cth). In this article we will explore the impact of a statutory demand from a creditor’s perspective and a debtor’s perspective.

Section 459E of the Corporations Act 2001 (Cth) explains that a creditor may serve a debtor with a statutory demand. A statutory demand is an instrument which sets out the demand and may have an affidavit attached to validate the claim.

Section 95A(1) of the Corporations Act 2001 (Cth) defines a ‘person’ (which includes a company) as being “solvent if and only if, the person is able to pay all the person's debts, as and when they may become due and payable.” Insolvent is defined in s95A(2) as being unable to pay all of its debts as and when they become payable. This definition clearly places the test on a cash flow test rather than a balance sheet test.

We often find that directors are unaware of an important section of law: Division 269 to Schedule 1 of Taxation Administration Act 1953 (Cth). This places a positive obligation on Directors to cause the company to meet its pay-as-you-go (PAYG) and superannuation guarantee charge (SGC) liabilities or to take action to ensure that the corporation takes certain steps.

As already identified in a previous article titled, How to Restructure your Business: Part One, the broad insolvency process in Australia can be broken down into 2 stages:

The insolvency process in Australia can be broken down into two stages.

1. Restructuring: when there is a possibility that the company can turnaround or be salvaged
2. Winding Up: when the company is irretrievably insolvent and has no real possibility of a turnaround or resurrection