Money owed

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

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  1. Terry_w

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

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    I don't know how you have a charge over an intangible asset like a business - what is a business for example? It is mainly goodwill. If you could have a charge over it and it has been transferred then how do you take possession of it? I don't know the answer to this, but a business specialist lawyer may.
     
    Terry_w, 1st Dec, 2016
    #101
  2. geoffw

    geoffw Moderator Staff Member

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    The business was intangible enough that I sold it to him for a lot of money.

    I thought it was the business that drives the other entities- that they are just legal entities to protect the business.
     
    geoffw, 1st Dec, 2016
    #102
  3. geoffw

    geoffw Moderator Staff Member

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    Another thought. Would any current affairs shows be interested in the story?
     
    geoffw, 1st Dec, 2016
    #103
  4. Terry_w

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

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    You would have to look at the contracts of sale to see what it was that you sold to the company. Is it something you could recover by taking over the shop for example?
     
    Terry_w, 1st Dec, 2016
    #104
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  5. Biz

    Biz Well-Known Member

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    This is not a story about a dodgy builder nor how to save money at Aldi so no.
     
    Biz, 1st Dec, 2016
    #105
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  6. Blacky

    Blacky Well-Known Member

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    Like a franchise for example?

    The franchise itself could be claimed as a tangible asset I would have thought. Franchises are regularly sold/transferred indipendand of a company entity.

    Not sure....
     
    Blacky, 1st Dec, 2016
    #106
  7. Terry_w

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

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    The franchise would own the intellectual property such as the name of the business. G would have sold or assigned the right to use that name. The business would have defaulted on that agreement with the franchisor so that probably is not property that could be recovered.
     
    Terry_w, 1st Dec, 2016
    #107
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  8. geoffw

    geoffw Moderator Staff Member

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    The two businesses which are guarantors for my loan are both ongoing concerns. They are not in the name of the person who used them to guarantee the loan- but that loan only specifies the business, not the owner.

    It could be easily proved that he is actively still involved in the business as he works in the business almost daily.
     
    geoffw, 1st Dec, 2016
    #108
  9. Terry_w

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

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    In that case how did you take a charge over the business? the owner must have given some sort of guarantee? Otherwise the charge was ineffective from the start.
     
    Terry_w, 1st Dec, 2016
    #109
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  10. geoffw

    geoffw Moderator Staff Member

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    I'm not sure about the question.

    This is what happened.
    .I sold the business (one company to another)
    .A part of the sale was cash, a part was vendor finance provided by me. So instead of me getting paid the whole amount for the business, he promises to pay me back a part with interest.
    .As security against the loan, he provides the securities as previously detailed.
    .He paid for a while, and then stopped paying. That's when this thread started.

    Now he's transferred the companies so that part of the security is worthless- but as I see there's a part of the security which is still actively trading- the businesses, which did not have a company name specified. He might claim that the businesses have transferred ownership but he is still in there actively working in them.

    Can you explain your question further please?
     
    geoffw, 2nd Dec, 2016
    #110
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  11. Terry_w

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

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    So your company X sold business to their company Y

    You also had a loan agreement with Company Y with a guarantee by person Z (for the vendor finance amount).



    Company Y then transferred the business to Company W?



    When you say he has transferred companies do you mean he was a shareholder and had transferred his shares or the company Y transferred the business to company W?



    I am unclear who owns and operates the business now.
     
    Terry_w, 2nd Dec, 2016
    #111
  12. geoffw

    geoffw Moderator Staff Member

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    Thanks Terry.

    Paragraphs 1 and 2 are correct.

    After that I don't know what has happened to the legal ownership.

    All I know is that Company W has started paying the employees instead of company Y. I don't even know if the business has transferred, or whether it's just the income and bills going through Company W. I assume though the company would have transferred in some way, but I have no way of finding that out. I don't even know the name of Company W (yet).

    Apparently Mrs Z owns Company W. But Mr Z, whose name is no longer associated with any of the businesses, is in there and operating the two businesses listed as security.
     
    geoffw, 2nd Dec, 2016
    #112
  13. BennEznElle

    BennEznElle Well-Known Member

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    As Terry said, not sure what value you would get from knowing the entity that now operates the business, but if you need or want to know to pass the info on to the liquidators, then just go in there and buy something as the ABN will be on the receipt and you can just look that up.
     
    BennEznElle, 2nd Dec, 2016
    #113
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  14. geoffw

    geoffw Moderator Staff Member

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    Thanks, that's a good idea. I'll check it out.

    I'd have to get somebody else to do the deed, as he is unlikely to take well to me being in the shop.
     
    geoffw, 2nd Dec, 2016
    #114
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  15. Terry_w

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

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    Are you planning on bankrupting Mr Z?
    He probably knows that he could earn $54k approx from Company W and not have that money fall into creditors hands. But you could possibly argue he is under remunerated and get at some of the excess wage above $54k - prob not worth the bother though.

    If Company W has just taken over the 'business', which is probably what has happened, you could argue this was an undermarket value transfer. Because they are companies the corporations act would apply.

    This could amount to

    - Unfair Preferences;
    - Uncommercial transactions;
    - Fraudulent transactions;
    etc

    Have a look at the corporations act at Part 5.7B Division 2, especially these sections:
    Division 2--Voidable transactions

    588FA. Unfair preferences
    588FB. Uncommercial transactions
    588FC. Insolvent transactions
    588FD. Unfair loans to a company
    588FDA. Unreasonable director-related transactions
    588FE. Voidable transactions
    588FF. Courts may make orders about voidable transactions
    588FG. Transaction not voidable as against certain persons
    588FGA. Directors to indemnify Commissioner of Taxation if certain payments set aside
    588FGB. Defences in proceedings under section 588FGA
    588FH. Liquidator may recover from related entity benefit resulting from insolvent transaction
    588FI. Creditor who gives up benefit of unfair preference may prove for preferred debt
    588FJ. Circulating security interest created within 6 months before relation-back day


    CORPORATIONS ACT 2001
     
    Terry_w, 2nd Dec, 2016
    #115
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  16. Terry_w

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

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    prob not a good idea anyway. One of my clients did this and the shop owner called the police and alleged threats were made and they had an AVO take out against them.
     
    Terry_w, 2nd Dec, 2016
    #116
  17. geoffw

    geoffw Moderator Staff Member

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    The bankruptcy has already been triggered by somebody else, somebody who also provided a vendor finance loan, and similarly found when the payments stopped that everything was in Mrs Z's name. This person only had personal guarantee from Mr Z, not backed up by anything else. That business however failed because the lease was not renewed when it came up less than 2 years after he bought it. (The contract had specified a lower price if the lease was not renewed, but he was refusing to pay even the lower price. This has contributed to Mr Z's dire financial situation).

    So this latest spurt of activity has come about as a result of me receiving documents from the administrator, asking me to provide proof of debt, which I have done. I have talked with the administrator's assistant about the transfer, but they really wanted the name of the new company in order to investigate further.

    I've just found out today that he has not made employer's contributions to employee super for over 2 years.

    So I understand that Mr Z is in a bad place. This does not excuse the transfer of assets in order to avoid debt. If it is not untangled, he will walk away keeping all of his assets (albeit in the name of his wife) but owing no debt.
     
    geoffw, 2nd Dec, 2016
    #117
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  18. Blacky

    Blacky Well-Known Member

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    Geoff
    I feel for you.
    Have you engaged your own lawyer?
    If I have read your thread correctly the guy has basically transferred all of his assets to his wife. In addition has set up another company (presumably) owned and directed by his wife. And then transferred the assets of his company into the 'new' entity (including the good will)

    If this is the case I would say that you have fairly solid rounds to Persue him, her, and the entities as they have likely been transferred for under market value. Thus he is actively attempting to 'move' or hide the assets from creditors.

    It could be a long drawn out affair.
    How frustrating.

    Blacky
     
    Blacky, 2nd Dec, 2016
    #118
  19. geoffw

    geoffw Moderator Staff Member

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    @Blacky

    I had engaged a lawyer nearly six months ago when the debt collection process failed. We had lodged a claim against him In court and he had been served- the bankruptcy shortcircuited that. That's good in one way as there would have been a lot of legal expenses in continuing.

    Essentially you are right in your assessment.
     
    geoffw, 2nd Dec, 2016
    #119
  20. geoffw

    geoffw Moderator Staff Member

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    I've done that, and as expected, there is an ABN on the receipt which is different to the ABN on the loan guarantee; the other business has its own ABN. A paid report from ASIC showed his wife as director.

    However, something quite surprised me. It turns out that there's yet another entity which is paying the staff- one entity pays staff in both stores. This one is a family trust.
     
    geoffw, 5th Dec, 2016
    #120
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