The good news is these problems can often be overcome by having the company viewed and then restructured after assessing what in the first instance has caused the problems. By having a restructure or an assessment done of your company when it is in the early stages of duress may save 10’s of thousands of dollars and large periods of emotional duress.
Although we believe it is bad practice to borrow more money to get out of debt, there are as in all cases some exceptions to the rule. Often by borrowing an amount of money now, a proposal can be put forward to creditors, whereby they will accept a lump sum rather than a time repayment period, but the lump sum being substantially less than the total amount of debt owed to them. Alternately, sometimes particularly when there is work in progress or the debtor is comfortable it will come in, a short term fix is of immense advantage.
NEWS & EVENTS
Government's Phoenix crusade continues into 2012 Over the course of 2010 and 2011 we reported on a number of legislative changes increasing the Australian Taxation Office's (ATO) powers to requiretaxpayers to provide security, the clamping down on unpaid taxes, changes to the director penalty notice regime and the increased focus on phoenix avoidance schemes.
As part of its 2011 budget the Federal Government announced measures to counter and deter what it deemed 'fraudulent phoenix activities' and that crusade is set to continue with the Federal Government
recently implementing the Corporations Amendment (Phoenixing and Other Measures) Act 2012, which was assented to on 26 May 2012 (CAPAM Act).
The ATO estimates that approximately 6,000 companies in Australia have gone through a phoenix process.
Phoenix activity is generally, activity where a company:
•fails and is unable to pay its debts;
•acts in a manner which intentionally denies unsecured creditors equal access to the available assets in order to pay debts; and
•within 12 months of closing, another business commences which may use some or all of the assets of the former business, and is controlled by parties related to either the management or directors of the previous company.
Below is a brief summary of the basis of the CAPAM Act and how it may impact you. In summary, the CAPAM Act amends the Corporations Act
2001 (Cth) (Corporations Act) to:
•Provide ASIC with an administrative power to order the winding up of a company to facilitate payment of employee entitlements where a company has been abandoned. Under the CAPAM Act, ASIC will be able to take into account policy considerations, including the ability for employees to access GEERS, or possible phoenixing behaviour by the directors of the company in order to seek a winding up order.
•Amend the advertisement requirements for insolvency practitioners. The Corporations Act previously required petitioning creditors and liquidators to publish notices of certain events in the print media or the ASIC Gazette, often at a significant cost. The amendments now allow for publication of notices by other means, namely through publication on a single corporate insolvency notices website to be maintained by ASIC. Schedule 1 of the Corporations (Fees) Regulations 2001 sets out the current prescribed fees of $64 for notices previously published in the Gazette, and $400 for other notices. From 1 July 2013, those fees will significantly reduce to$145. This is substantially cheaper than previous costs to advertise in larger publications such as the Australian or the Courier Mail.
•Impose a notification requirement on insolvency practitioners in relation to paid parental leave payments. The CAPAM Act now imposes an obligation on external administrators to advise theSecretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FAHCSIA) where a company to which they are appointed is a paid parental leave employer. As
the department responsible for administering the Paid Parental Leave Scheme, the changes allow FAHCSIA to determine whether to continue paying paid parental leave payments to the company or to make the payments directly to the employer.
What does this mean for you? The CAPAM Act imposes significant amendments to companies and company directors.