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What to do when served with a creditor’s statutory demand?

Firstly, don’t panic (straight away).  Think clearly.

For starters, it is a good idea to understand exactly what a creditor’s statutory demand (“the demand”) is?

Our related blog page is a good place to start?  It explains what a demand is in some detail.  That blog should be read if this is the first time your business has received such a demand.

But, make no mistake, a creditor’s statutory demand can have very serious consequences.

You, the director, must immediately action it by following the steps as suggested below.  Otherwise, in consultation with ourselves, action the demand using our free introductory review.

Once you’ve read this present blog and you know what a creditor’s statutory demand is, the focus moves to what now?  What to do next?

But first ….

Who, what, when, where, why, how?  

It’s a useful practice in business to always be considering these pointed questions.

But, they are probably best considered before a creditor’s demand is received.  Ideally when or before a debt is incurred.

Our separate blog on good debt practices may also be a helpful place for a business, particular if the director thinks it may be headed for a cashflow squeeze?

Having however incurred a debt, and now having been served with the demand, the director must consider what next?

The questions above are a helpful place to start.

  1. Who is making the demand?  Did you business incur a debt from this entity?  Was the debt actually incurred by the business that is named on the demand?  If not, the demand may be able to be set-aside, or better still, maybe the creditor will withdraw it without much fuss?  The demand’s requirements, discussed in another blog, are highly precise with no leeway for error.
  2. What is the demand saying your company owes?  Demands can only be issued to corporations, so if you’ve received a demand against you personally then it will not be of any effect.  Additionally, the amount owed must be for at least $2000.  If the debt is under $2000 presently, the demand is of no effect.  Assuming the demand is made out to the correct legal entity and is in excess of $2000, read on.
  3. When was the demand served on your premises?  This is both a technical and legal question.  If the article has come through the post (in the ordinary course of postage) the item is presumed to have arrived several days after post mark on the envelope.  It’s always an excellent idea to retain the envelop with the post-mark.  This can be very useful.  Is some instances, we’ve been able to get very large creditor’s statutory demands set aside for minor deficiencies (see blog – ATO v GSFPA link tba).  Can you answer this when question precisely?
  4. Where was the debt incurred, where is the jurisdiction of the loan, tax debt or other facility?  This is less relevant, but in some cases it can make a difference where the demand was served, where it was sent from (if posted from overseas), where it was left (if it wasn’t served at the company’s premises).  If in doubt as to whether procedures have been complied with, call us for your free initial review appointment.
  5. Why – why is the demand being used now?  Is the debt out of time?  Why is the demand being used rather than other debt collection techniques – this can be a very important question particularly if the debt was ever disputed (see our good practice blog).
  6. How?  How was it served?  How long ago was it served?  How was the debt incurred?  This last one is often highly relevant.  Whether a debt such as a PAYG or GST ATO tax debt has been incurred over several months or longer, or has continued to grow over time – can suggest bigger overall issues within the business?  For instance, if a business has been unable to fully pay its super, GST or PAYG ATO debt on time each quarter, or when due, the company may need to look more closely at itself?  Is the company trading profitably?  Is the owner taking too much in drawings?  Are overheads too high?  Are fixed or variable costs too high?  Our advisory service can offer a range of excellent solutions to a business to enable them to restructure and avoid cashflow issues, insolvency and worse.  A free introductory business review is available to assess a company’s issues and potential solutions.

After answering these questions, act.

It is critically important, after receiving a creditors statutory demand that the company does not ignore it (and hope it goes away).

Yet some business owners can be embarrassed to discuss these issues with their accountants.

The law provides only a short period after receipt of the demand to take action – so it is critical that action is not delayed.

Business Asset Protection offers a free introductory first session to help a director work through the above and other relevant questions.

Our service is judgement free and focussed very much on solutions to the present problem.

Our available solutions are often more comprehensive than merely negotiating an extension of time to pay the ATO.

Whilst we can often provide tax debt loans, often times a range of other solutions may also be better suited to some clients?  These can dramatically simplify your business and give it a fresh start.

If your company has received a creditors statutory demand and is unable to, or unwilling to pay the claimed debt, call us to schedule a free appointment – obligation free – on 1300-327123 (1300-DCP123) or click our free appointment scheduling link.  Our service

 

To view related blogs, follow the following category links and tags below.

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Fixtures

It might seem like a question with an obvious answer, but what is a fixture? What is a fitting?  And, what is equipment?

We are presently working on a project where our client is claiming title to commercial equipment.  The equipment was placed in a function space which features elsewhere in our blogs – current projects & past projects.  The land has recently been sold by the mortgagee in possession.

In the last couple of days these questions have arisen:

  • what is a fixture?
  • who can have title to it?
  • can a person abandone title to goods? and,
  • what is required to secure title to the fixture/s?

In this instance the equipment is commercial kitchen equipment.

Background

The purchaser from the mortgagee seems to be suggesting in correspondence that portable equipment is nevertheless a fixture.

The implied threat is to abandone the purchase from the mortgagee unless the secured lender, who owns the equipment, waives their title?

The answer to these questions is this. 

 

Analysis

Typically a fixture is a chattel which is annexed to land in such a way that it becomes ‘part of’ the land and ceases to be the personal property of the person who attached it.

Have a think about your workspace.  What are some chattels and what are fixtures and what might be fittings.

Take the kitchen sink for instance.  It’s probably quite impractical to remove that.  It would perhaps rip off the tiles in the process.  But what about for instance shelving.  Sure the shelves are screwed into the wall, and so it might be argued that they become part of the land.  But do they cease to be personal property?  And why were the shelves put there in the first instance?

These are all relevant questions in considering what are fixtures and what aren’t.  

We may discuss fixtures in further detail as this dispute is worked through.  

If you have any thoughts or comments or questions, please feel free to direct message me at:  mark@dcpartners.solutions – thank you.

14 August 2018

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Welcome to Business Asset Protection

This post launches our blog series where we will discuss a range of topics which are perhaps important to those holding assets, their advisors, mortgage brokers and private lenders and others.

In the coming week/s this blog will discuss:

  • A range of relevant legal terms and their meaning/s.
  • Securities in Australian law such as the PPSA, common law and otherwise.
  • Insolvency – including personal and corporate insolvency.
  • some case studies.
  • various legal remedies, and
  • other related topics.

We welcome your feedback, or if you’d like to submit a question or comment – please complete the form below.

Mark Smith, Director   IMG_2744

Business Asset Protection

www.assetprotection.biz