But if you do get paid and he subsequently goes under - then you might find others coming for the money you received that should have been "shared". You don't get to relax - even after payment.
He has now declared bankruptcy. I have paperwork to fill in to ensure my claim is considered with others. There is, of course, a big discrepancy between what he says he owes me and my own calculations (which were based on a spreadsheet he sent me at the start of the loan). He has previously shifted assets to avoid another creditor, and there are rumours he has done the same. His listed assets are negligible. In answer to a previous point raised by Terry- the two businesses used for the guarantee are listed on PPSR, however the companies and he himself are not.
So I've received some further information. This is how the guy has shifted assets away from himself- at least in terms of employees, and I assume that similar has been done in terms of turnover, buying supplies etc: .He has created a new company in his wife's name .All employees have a new enterprise agreement, which they all are "encouraged" to sign. .The employees start getting paid by the new company In the meantime, the company that I have a registered interest in is no longer trading, and the guy who is being bankrupted has no assets to claim against. Between this company and a number of others, he has no assets which are retrievable, so all the money which he owes gets written off by the administrator. End result. He gets to keep all of his assets (just in his wife's name); all his debts (nearly $2M all up) are written off. While there are clawback provisions which legally allow assets which have been transferred purely to avoid bankruptcy to be pursued and potentially claimed against, in practice, this depends on the willingness of the administrator to pursue (it could be an expensive process and the administrator gets paid from the same bucket as I hope to be paid) and the ability to be able to trace the companies which now hold the assets.
Is there a way to search in ASIC for office holders? If I could search for companies for his wife's name, for companies which are registered at the same place as his companies, there's a possibility I would be able to find at least a company name or two- but I can't see how to do this on the ASIC web site.
Person searches are paper only as far as I know. ASIC charges a fee for this type of search. http://asic.gov.au/regulatory-resou...r-information-about-a-specific-personal-name/
Have you received anything from the administrators yet (eg a list of creditors and assets) ? Are you one of the largest creditors or is there a big list ?
I've spoken to the administrators- at least to somebody's assistant. They seemed not to know a whole lot, but were asking me if I knew the name of the company so that they could investigate a potential clawback.
Hi Geoffw, Didn't you have 2nd mortgages over his properties as security? what happened to them? also did the lawyer make you aware at the beginning that taking security over a business that this was a possibility? (what he's done) sounds like an easy way to get out of 2mil worth of debt. Cheers, Elives
He owns no real property to take a mortgage against. If he'd had equity enough for a mortgage he wouldn't have needed the vendor finance. Two lawyers in two firms plus one accountant thought that the arrangement set up wasn't too bad.
Sucks Geoff. Been in this situation before and got little out of it. Hope you get some kind of result.
I agree with Biz your situation sucks but the fact you've posted about this on the forum is terrific as it lets other investors (myself) aware of the dangers of taking security of a business for a deal. Thanks for sharing. Elives
By way of explanation. I had the business and I sold it to him- about half cash, and half lent to him as vendor finance. The price was rather much higher because of the vendor finance component. His business was security against the loan for the business I was selling him. So it wasn't security against a real property.
Taking security of the business, is that just a personal guarantee? or is there some type of caveat lodged against the business? that notifies you of changes to it? Cheers, Elives
Agreed. terribly handled if there were such big loopholes or get out opportunities for him. genuinely would not discount tjis geoff
I think Geoff may have taken a PPSA charge over the company. But the company just transferred the business so there was an empty company left. I have seen this happen to a woman who invested in a Thai Restaurant in Randwick. She had shares in the company operating the business. She stopped getting paid but seen the restaurant still operating. The person she was dealing with disappeared (skoonvimoot was the name) and by the time she gathered up enough courage to go into the restaurant and ask 6 months had passed. It turns out the company had sold the restaurant to someone else about 8 months ago and the scammers took the money and fled.
Geoff don't feel bad about suing the lawyer. All lawyers have professional indemnity insurance so if someone sues me in relation to legal advice i don't defend it, but just contact the insurers who will then act on the matter, they will then assess the matter and decide to make an offer to settle or to defend. You should seek legal advice on whether you have grounds to sue or not - sounds like you do.
That is correct- there's a little bit more to it. Security is listed on the loan agreement: .The company running my business (now empty) .The company running another similar business (also now empty) .Personal assets (almost none) ."Charge over the business currently operating as a [franchise name] and located at [address], or over the business from wherever the business relocates" (wrt to the business I sold) .Same charge over the other business So on the face of it, it's not against the legal entity but the business per se? The PPSR however would have been against the business name. The two businesses I have the security against are in the process of being sold as I understand. I wouldn't feel bad about suing, but I think there's a few things which have to pan out first before I pursue that avenue. It's a twist which surprised me but I see the value in it. Thanks @Terry_w
