Money owed

Discussion in 'Legal Issues' started by geoffw, 19th Apr, 2016.

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  1. sanj

    sanj Well-Known Member Premium Member

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    Agreed, an unsecured vendor finance deal where title is given upfront and there's only a personal guarantee for the seller in the event of default is a dream scenario for the buyer and no lawyer should have recommended that
     
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  2. Blacky

    Blacky Well-Known Member

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    I was also wondering who provided you advice on the vendor finance deal.
    By the sounds of it you are unsecured, and dont really know the borrowers financial position (or even if the borrower and the operator are the same?).

    Blacky
     
  3. geoffw

    geoffw Moderator Staff Member

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    The initial appointment with the debt collector went well, thanks for the suggestion @D.T. I didn't go with your suggested collector though. Their website boasted $2.5m collections last year- and as the total amount owing is more than 10% of this I thought they didn't really have enough experience in larger debts. I've gone with Debt Collection Agency | Debt Recovery Agency at the suggestion of former somersoft member AceyDeucy. The cost seems quite reasonable- $300 plus a small percentage of the amount collected. I thought it would be larger than that.

    On checking the contract, I found out that it is secured- against his company, two businesses and house. My memory served me quite badly. The businesses though are worth a lot less than what they were, and there would not be a great deal recoverable from those.

    There are two amounts in question. One is the P&I payments owing due to non payment for 11 months. The other is the entire principal. My offer of a discount was in return for settling the entire debt, not just the amount owing in the short term. I would be much happier getting that amount paid (and the discount is on the entire amount owing including accrued interested) than getting just the outstanding amount paid and having this situation ongoing for another 7 years. I'm not sure yet if debt recovery can get me anything more than just the payments owing.
     
  4. Terry_w

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

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    Who was your contract with? A person, 2 persons or a company?

    Who owns those businesses then and now? Who owns that house and is it still owned?

    Consider also the limitations act - if there are no payments for x years the debt may be unenforceable. X will vary depending on whether a contract or deed and which state law applies. It may be 6 years or may be less.
     
  5. geoffw

    geoffw Moderator Staff Member

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    Terry

    Contract was between my company (actually listed as "limited" rather than lender, I didn't notice this before), his company (listed as borrower) and himself (listed as guarantor).

    His entities (I gather a trust with corporate trustee) own the businesses.

    I don't know about the house. I gather this will be the next step in the collection process.

    He does have commercial properties in his super fund. He once tried to offer one as part payment, except that he probably wasn't allowed to do so.

    His missed a payment in May last year, paid one in June and hasn't paid since. So six years is a while away.
     
  6. Terry_w

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

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    Sounds good Geoff. If you want to sent me his address I will see if I can find the owner via RP data. Even if the house is in his wife's name you still may be able to attack it, but it will be more cumbersome - but the threat is sometimes enough to get a payment out of them.
     
  7. Blacky

    Blacky Well-Known Member

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    Geoff
    This is good news. At least you have something to use as a stick.
    Is any of the security registered? Ie - do you hold a mortgage over the property?
    If not, you should be in a strong position to at least place a caveat over the property.
    Im not sure how or if you are able to caveat a business, but potentially some of the assets you may be able to get a registered charge over. At least then, if he does manage to sell the business you have a seat at the table on the day of settlement. You will recieve a cheque before he does.
    You will need advice on this - maybe Terry will know better.

    Good to see that at least you have a half resonable security position. Not a nice scenario for anyone involved. Wish you all the best with it.

    Blacky
     
  8. Terry_w

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

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    You generally can't caveat a house for a debt. You can only caveat if you have a caveatable interest - which the agreement may give you depending on the wording.

    You may also be able to lodge a personal property security charge over the assets of the company - but only if the agreement lets you, or if the company later lets you. A business is an intangiable thing that cannot be caveated. Any assets of the company could be charged up though.
     
  9. Blacky

    Blacky Well-Known Member

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    I would have thought that the loan contract would provide a caveatable interest - however, as you state is is dependant on the wording.

    This confirms what I thought to be the case.

    Terry - if the individual, as guarantor, holds other real assets (eg. other property), would a caveate over other property be possible? (again, depending on the wording of the loan contract?)

    Blacky
     
  10. Terry_w

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

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    Usually not, but if there is a specific clause which gives a charge over property owned by the guarantor then yes.
     
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Floating charge could be given over a company's assets but it is registered with ASIC and becomes public information. Lenders might not like it.
     
  12. Terry_w

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

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    Floating charges now come under the personal properties securities act, no longer registered with asic, but can still be lodged. This is a charge that floats over all the assets of the company, other than land.
     
  13. geoffw

    geoffw Moderator Staff Member

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    I have previously attempted the PPSR route. Each time I was asked to wait.

    Apparently he has previously renegged on a vendor finance arrangement by closing down the companies on the agreement, and transferred any personal property into his wife's name. There was no security on that one other than personal guarantee.

    I spoked to the person who was short changed by this guy. He is still seeking to get his money from the guy.

    I checked the ASIC registration details- he is still registered as a director on the company which owns my former business.

    I've now just received information that this guy is going to be bankrupted shortly.
     
  14. sanj

    sanj Well-Known Member Premium Member

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    sorry to hear geoff. it has been 3 weeks since you started the thread, have you taken any meaningful action to protect yourself? it should be you bankrupting him and hopefully being first in like and not someone else.

    have you put a caveat on his property or any other assets?

    you said your loan was secured against his house, was it first or 2nd mortgage? even if 2nd hopefully there's something left after he pays off the bank or whoever it is that's winding him up.

    if you haven't sought good legal advice on what your options are your time is fast running out. maybe it's too late to do something meaningful, maybe it isnt but there's only 1 way to find out.

    you worked your @rse off for years to get that money you need to be more aggressive to protect it in a situation like this.

    if that's not in your nature its even more important to consider getting someone who understands the legalities in and out and acts for you.

    best wishes, hope it works out. now get on it pls! if he does end up leaving you with nothing at the very least you'll want to be able to know you did your best to protect your interest.
     
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  15. geoffw

    geoffw Moderator Staff Member

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    Sanj

    I've put it into the hands of a debt collector, as mentioned previously. My lawyer is happy for it to go this way; meanwhile he is monitoring. Demand letters should have already gone out, I'be already asked why they have not- hopefully very soon.

    He rents- if he has a house in his name it's not the one he lives in. Probably a deliberate asset protection policy. He does have substantial real estate assets in his super fund however. I don't know if they can be accessed as a part of liquidation. I wouldn't think it fair if my retirement is stuffed up while his is comfortable.
     
  16. sanj

    sanj Well-Known Member Premium Member

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    his super assets are not something you'll be able to get your hands on.

    how good is your lawyer? has he confirmed if there is a caveat over any of his property or any of the other questions various people have asked? I don't see why a debt collector needs to be involved, presumably (and granted it's a presumption) the agreement you both signed would have a section covering what occurs in the event of a default. debt collectors are a waste of time when there is none to waste, if the news about his impending bankruptcy is true.

    you should commenced proceedings to recover your money immediately, following the notice period, if any, in your agreement and protect your interest in the strongest way possible against the business' assets, his personal assets and anything else that has been used by him to guarantee the loan.

    sorry im aware the above advice is entirely unsolicited and might not be appreciated
    but from the admittedly small amount I know of this situation I don't think it has been handleD as well as it should by your lawyer and by extension by you. if lawyer isn't up to the mark (might well be the case if the agreement he drew up didnt avoid this situation) then give him the boot and find a bulldog who understands the importance of the situation and the time sensitive nature.

    I know from personal experience that sometimes a merely competent lawyer can be the most expensive lawyer vs someone who charges twice the amount but gets a better result and quicker too.

    if the agreement allows, and it certainly should, you should start proceedings to sell his house to recover your owed funds. was it a 2nd mortgage or 1st? if 2nd there might not be all that much equity there.
     
    Last edited: 11th May, 2016
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  17. Terry_w

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

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    Yeah super is generally hard to attack unless he just made some big transfers into super before going bankrupt;
     
  18. sanj

    sanj Well-Known Member Premium Member

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    sorry last point - at the top of the page you said it is secured against 2 businesses and a house but above you just said "if he has a house in his name", this is vital and basic info your lawyer should have clarified long ago, it should be clearly laid out for you what the worst and best case scenarios are and there shouldn't be "ifs " at this stage with there being no margin for error.

    of course the property offered as security could be owned by a 3rd party, in that case it's potentially good news because his bankruptcy would probably not affect that security.
     
  19. Terry_w

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

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    But A cannot mortgage a property owned by B. B would need to be a party to the agreement - Geoff did this happen?

    I would be wary of using the same lawyer as he seems to have possibly been negligent.
     
  20. MTR

    MTR Well-Known Member

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    Unfortunately it's not sounding good





    Sorry to hear this.

    I am pretty sure it is illegal to transfer assets when declaring bankruptcy, and I think 7 year timeframe prior to declaring bankruptcy?

    perhaps Terryw will have more info on this
     
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