Bankruptcy... A bit of a vent :-(.

Discussion in 'Money Management & Banking' started by moyjos, 1st Nov, 2015.

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  1. TMNT

    TMNT Well-Known Member

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    I assume thay its far easier for medoum to larger business to rack up debts and close and have very little invesyed from day 1

    So what about for tiny buisneses

    Lets say someone with a small retail shop with one employee.

    They would have had to put a few 100k into setup plus stock

    If the business goes down the tube. Then they wpuld have lost all their capital for stock. And when they fold. They might owe a few creditors for stock or wages. But at this point. You have lost stock capital as well as inital capital.

    A few 100k initial investment has become maybe 50k debt.

    Hardly a win even if you could buy a few gift cards etc

    Btw. How would a person buy gift cards and jusitfy it as an expense......
     
  2. moyjos

    moyjos Well-Known Member

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    Yeah we will pick up some of their stuff.just by the natural order of things. eg: Us and Them worked for a few real estates, so until someone else comes in, we will get ALL the R/E work.

    I don't like working for builders, as they are notorious for going belly up :( and taking the little guys with them. If a builder approaches us it is STRICTLY payment before we manufacture. If they don't like it...tough :)

    I don't think they even attempted to make it an expense. Just racked it all up on the credit cards over the final few months.
     
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  3. Ed Barton

    Ed Barton Well-Known Member

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  4. TMNT

    TMNT Well-Known Member

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    Delieberatelt going on a spending spree before bankruptcy is a very serious thing. What ever its called.

    Obviously someone would have to be prove so.

    Hypothetically if i was like kind of person. Id get a loan for a 200k car. Sell it on day one and keep the cash and file for bankruptcy.

    While paying myself some silly salary on the books. And buy heaps of stock on credit for resale. Alkng with signing up every possible credit card possible and emptyinf it
     
  5. pinkboy

    pinkboy Well-Known Member

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    Book keeping is self assessed. You can memo what you like on any entry.

    In the last 6-12 months, company directors that know they are going bust do several things to make life 'easier' for themselves in their new upcoming 'situation':

    • They stop using their normal suppliers and start looking around to see if they can get supplies on credit from new suppliers in readiness to not pay original supplier and subsequent supplier/s.
    • They stop paying the ATO. The ATO takes several months to a year before they start catching up with you.
    • Staff superannuation payments stop.
    Things directors continue to pay to be able to 'operate' while going broke:

    • Staff wages.
    • Overdraft payments. (Banks come after you much before the ATO for instance )
    • Lease
    • Utilities
    • Freight. (This is one of my indicators for taking on new clients - I as them for a credit reference on their freight carrier. No pay, no moved supply).
    • Bare minimum supplies.
    While doing this ^^^, they are using any incoming $$$ to buy things like described above, or trying to put cash away to family for future use etc.


    I once saw a client of mine disassembling a 20t overhead crane out of their shed. I asked a workshop guy what was going on and he told me it was 'being sent away for repair'. Unlikely I thought to myself so when I met with the director I asked what was going on. He said same thing. We did our meeting and I got this funky feeling. I didn't end up doing the job I met him for, but about 3 months later he went under....and the crane was never found. He took me for $60k, but luckily not another $50k odd more.

    Moral of the story is....directors know when to start milking the system when they start trading insolvent. Trust your gut and keep on top of debtors if there is any I'll feeling or hesitation in getting payment when they fall due and payable.

    pinkboy
     
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  6. Ed Barton

    Ed Barton Well-Known Member

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    Please proof read your posts. No one likes to read a post three times to understand it.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    You won't be able to do that as the car will be used as security - personal property securities act. Actually you could do it if the buy doesn't check.
     
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  8. TMNT

    TMNT Well-Known Member

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    Ahh very true. Forgot about that.;)

    Whats the law you are breaking if you try and empty out your accounts and get heaps of credit delibesretlty before bankruptxy?
     
  9. pinkboy

    pinkboy Well-Known Member

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    Fraud.

    pinkboy
     
  10. legallyblonde

    legallyblonde Well-Known Member

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    Gawds that is so BS....
     
  11. AndrewTDP

    AndrewTDP Well-Known Member

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    We've been burnt for 25k by such a situation. Subconsultant to another consultant. Client paid their fees.

    4 days after receiving payment they declared bankruptcy. ATO took what little money was left. We got nothing.

    He's still living in his nice waterfront house. Still driving his (wifes) Audi 4WD.

    At least his name is mud.
     
  12. WattleIdo

    WattleIdo midas touch

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    ....so must be renting?
    You know there's a lot of this on the North Shore, too.
     
  13. AndrewTDP

    AndrewTDP Well-Known Member

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    Wifes name. Was told it was not considered an asset by the receivers. Same with car etc.
     
  14. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    It could be - she could be trustee for him in an implied trust situation, at least for 50% of the value. If he has paid the mortgage even more so. But not worth chasing for $20k.
     
  15. Greyghost

    Greyghost Well-Known Member

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    Look at the way Americans do business, rack up business debts - then just walk away from them and start over.

    I guess that is why they are the "startup" capital of the world...
     
  16. Bayview

    Bayview Well-Known Member

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    LOL...

    Nasty words said to you by someone on a keyboard maybe thousands of miles away......

    Not really gunna raise the guilt level; is my bet.
     
  17. Redwing

    Redwing Well-Known Member

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    In other news

    Clive Palmer has agreed to pay $18 million to settle an $88 million liquidators' claim for unpaid Queensland Nickel rail transport fees.

    *note - he's yet to pay

    and

    Clive Palmer's Queensland Nickel made a string of "extraordinary transactions" only days before it collapsed owing debts of more than $200 million, a court was told.

    Mr Palmer's company paid $135 million to a $2 company controlled by his wife; paid $100 million to another related company for "worthless" coal tenements; and gave $1 million to a Kyrgyzstani woman out of "love and affection".


    Liquidators are also seeking to recoup $66m in taxpayer funds paid to employees of the nickel refinery under the Fair Entitlements Guarantee Scheme to cover their outstanding entitlements.
     
  18. Redwing

    Redwing Well-Known Member

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    Just like Trump's never been 'personally' bankrupt, just a few of the limited liability companies he owned declared bankruptcy :D
     
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