PROBLEMS & DISPUTES
Financial Problems
If a company or an individual should experience financial difficulties it is important that they obtain correct advice as to their legal position.
In some circumstances a lack of knowledge of the legal position has led a director of a company who would not be otherwise personally liable for the company's debts, to be sued for the company's debts.
It is also possible, to obtain the protection of the law whilst you reach an arrangement with your creditors. This can often provide you with that breathing space required to allow your company to continue or to allow you to avoid bankruptcy.
Harrick Lawyers can assist you with advice which will provide you with all alternatives to allow your business to continue and allow you and your family the best financial position in the circumstances.
We can also provide assistance when one of your customers is experiencing financial difficulties including advising in relation to retention of title clauses, which allow you to retain ownership of the goods that you have sold until you have been paid, personal guarantees which allow you to claim of the debtor company.
We can also assist you in dealing with liquidators, trustees in bankruptcy, receivers and managers and administrators who may be appointed to your customer's business so as to maximise your financial position.
Battle for Control
One of the most common and hard fought battles is for control of a business. Directors will often, after having a previously successful partnership, developed different views as to the way the business should proceed in the future.
In such circumstances there is rarely an agreement between the directors so as to allow an amicable resolution or separation of the respective director's interest in the business.
It is important to obtain legal advice so that you can maximise your position and ensure the best possible outcome whether by splitting the business or alternatively one of the directors purchasing out the other director on fair and reasonable terms.
We can also assist you with any litigation that may arise which unfortunately is all too common in the circumstances. It is important that such disputes are resolved as quickly and as efficiently as possible as directors who are fighting each other rarely give enough time to allow the business to continue to grow and prosper.
Debt Collection
Collecting the debts owed to your business is vital to ensure your ongoing financial viability.
The first step in ensuring the debts are collected as efficiently as possible is to ensure that you have appropriately drawn terms and conditions. We are able to assist you with drawing such terms and conditions which should include a retention of title clause where applicable, a personal guarantee from the director, a charge over the director’s personal property and the ability to claim interest and outstanding legal costs.
The second step is to ensure that your staff adopt the appropriate attitude with outstanding debtors. It is our experience that by adopting a particular attitude, you maximise the prospects of collection and minimise the need for legal assistance.
We are happy to provide you with a seminar for your staff about dealing with debtors.
If the debtor will still not make payment, we have found that one of the most effective ways of collecting the debt is to telephone the debtor. It is our experience that such telephone calls are an efficient method for collecting debts.
If the debtor does not respond to a telephone call we then prepare a letter of demand requiring payment within a set period of time.
If it is necessary to issue legal action we are able to assist you with the best possible method.
If the debt is not the subject of a genuine dispute, is greater than $2000 and is owed by a company, you are entitled to issue a statutory demand, which is the first step in a winding up application.
Statutory demands can be a very effective and efficient method of collecting debts.
Otherwise we can advise you on the appropriate court and the costs involved in bringing an application through the legal system.
Contractual Disputes
Agreements are made everyday in a business ranging from simple verbal agreements for the supply of goods or service to customers to complex written agreements for the purchase of large items of equipment or a joint-venture arrangements.
We can advise you on the drawing of the agreements so as to ensure that the objectives are recorded in the agreement and your liabilities under the agreement are minimised.
We can also assist you when there is a breach of the agreement whether the breach is caused by your company or by one of the other parties to the agreement.
We can assist by trying to reach an accommodation between the parties with respect to the breach or alternatively advising you of the options that are open to you when a breach occurs.
Depending upon the circumstances the innocent party can demand the defaulting party to correct the breach or he can treat the agreement as being at an end and to sue for damages.
The difficulty can be in determining whether the breach of the agreement is such that it allows you to treat the agreement as being at an end and whether it is to your financial advantage to do so.
We can assist you in determining the best approach to be taken when a contract has been breached.
Contamination & Waste Management
Contamination of the environment and waste management is becoming an increasingly important topic for businesses to consider.
We are able to assist you in understanding the duties that are applicable to businesses and the personal responsibilities of directors of such businesses with regard to contamination of the environment and disposal of waste in an appropriate manner and in accordance with relevant legislation.
Trade Practices
The Trade Practices Act (and its state equivalent the Fair Trading Act) is a broad Act which covers many different issues arising in business.
One of the most important aspects of the Act is the provision which prohibits misleading and deceptive conduct. This has become a powerful provision and has being used extensively where a person has been misled, even when there has been no intention to mislead that person.
Another important aspect of the Trade Practices Act is the Unconscionable conduct section which applies to small businesses when dealing with other businesses.
These provisions allow a court to declare, after taking into account 11 different factors set out in the Act whether the contract is unconscionable and should be set aside.
The Act also prohibits certain restrictive trade practices which discourage competition between businesses.
We can assist you in determining whether any of these provisions are applicable to your business and can also assist in training your staff so that they are aware of these important and far-reaching provisions.
Voluntary Administration
Voluntary Administration is the process whereby a company is given the opportunity to come to an arrangement with its creditors so as to allow the business to continue or alternatively if it is not possible to salvage the business, to avoid personal liability of the directors for the company's debts.
Voluntary administration may also be used to defeat any litigation that may be brought by a creditor or a liquidator upon the basis that they allege the directors were trading whilst the company was insolvent. Voluntary administration may also ensure the directors can avoid certain tax debts, which are due by the company but which in certain circumstances will be converted to personal liabilities of the directors.
It is our experience that when a company owes certain types of debts, the Australian Tax Office will, in attempting to collect money that is outstanding, serve certain notices upon the directors requiring them to pay the outstanding tax within 14 days, put the company into liquidation or put the company into voluntary administration.
It is vital that directors obtain correct advice because if they fail to do so they may become personally liable to the Tax Office.
A similar situation will apply when a company, is experiencing financial difficulties and comes to an arrangement with Tax Office to pay the debt by installments. If the company subsequently goes into liquidation, the Tax Office may be sued by the liquidator and the directors may, under certain circumstances, be personally liable to reimburse the Tax Office for any amount they are required to pay the liquidator of the company.
Unfair Preferences
Unfair Preferences is the name of the action whereby a liquidator, or a trustee in bankruptcy, will sue a creditor for recovery of amounts paid by the company before it went liquidation or by the individual before they became bankrupt to a legitimate creditor.
It is difficult enough to collect money that is owing for the work that you have undertaken or the goods that you have provided to a customer, but when you find that, after having recovered the money, a liquidator, or a trustee in bankruptcy wishes to reclaim the money from you, it can seem extremely unfair and unjust considering that you have legitimately undertaken the work and legitimately owed the money.
We can assist you in ensuring, where possible, that money that is paid to you by the creditor does not become an unfair preference, or if it is reclaimed by a liquidator or a trustee in bankruptcy as an unfair preference, the defences that are available to you and the methods by which you might defeat such a claim.