Jones Partner

Loans versus Gifts – Bankruptcy and Death – Why Should a Loan be Documented?

02/07/2018 by Bruce Gleeson

During the twenty-five (25) years experience and counting that I have had in administering bankruptcy matters, the issues in identifying whether monies provided to a bankrupt by a family member or friend are a loan or a gift will largely be determined by the facts and importantly documentation at hand (collectively called the evidence). Much like watching a CSI program, the Bankruptcy Trustee will be guided in making their decision with reference to the evidence. In a bankruptcy matter that I am presently administering, an issue arose where the Bankrupt was claiming that his father was an unsecured creditor of the Bankrupt Estate for about $50,000. Whilst on the face of it, that sounds strai

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Franchising – David versus Goliath! Can the system ever be perfect?

24/04/2018 by Bruce Gleeson

Despite reviews of the Franchising Code in 2007, 2010 and 2013, recent Franchisee disquiet regarding high profile retail franchises and indeed Franchisor failure (i.e. Red Lea Chickens) have many parties asking whether or not there should be further amendments to the Code and other legislation. This article will make three (3) observations regarding possible changes. Indeed in late March 2018 the Federal Government has announced another enquirer whereby the Committee appointed is due to report back to Government in September 2018. Simply put a franchise is an agreement in which a “brand” owner, the Franchisor, allows a Franchisee to trade under that brand and typically allows or re

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Corporate Insolvency Statistics – Does Danger Lie Beneath?

19/01/2018 by Bruce Gleeson

As we get stuck into 2018, a review of the corporate insolvency statistics for 2017 provides some useful insights about the trends in Australian corporate insolvency levels. I have also made some forecasts about how I think 2018 and beyond will play out. Whilst forecasts are simply that, I have taken both a pragmatic and conservative perspective in reaching such conclusions. BTW: let’s remember that in the Australian jurisdiction the word “insolvency” is used with reference to corporates, as opposed to in other jurisdictions, such as the United States where the word “bankruptcy” is used. What are the National Statistics Telling Us? * my forecast Based on the abov

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Drive Thru Bankruptcies – STOP PRESS – URGENT UPDATE

03/11/2017 by Bruce Gleeson

In my July 2016 blog, I wrote about the prospect of 1-year bankruptcies being announced as part of the (1) Productivity Commission’s Report to the Federal Government on 7 December 2015. The 1-year proposal was announced as part of the National Science & Innovation Agenda and then subject of a (2) Proposal Paper in April 2016. So, what’s the update? On 19 October 2017 the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 was read for a 2nd time in the Senate. I think it is likely the legislation will be passed and receive Royal Assent by the end of 2017 (absent of other major distractions for Federal Parliament!). Importantly this would likely see the start date to be around Ju

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Crowd Source Funding for Retail Investors. Good idea or the potential for them to be the new Ponzi scheme?

28/08/2017 by Bruce Gleeson

The Corporations Amendment (Crowd Source Funding) Bill 2016 is due to come into operation on 29 September 2017. Crowd Source Funding (“CSF”) continues to be a popular way that allows entrepreneurs/start-ups to raise funds from many investors. Until recently CSF in Australia has been aimed at “sophisticated” or “wholesale” investors. The above Bill effectively establishes a regulatory framework to facilitate CSF by small, unlisted public companies aimed at attracting retail investors. There is no doubt that new funding models such as CSF which enable new ideas to get off the ground and fly and contribute to productivity growth are a good thing. However, I do see the potential f

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Phoenix Activity – Exposing Fraudulent Directors

26/07/2017 by Bruce Gleeson

Whilst it is difficult to accurately determine the true cost of “phoenix activity” primarily due to a lack of relevant data, it has been estimated to cost the Australian economy in the vicinity of $3.2 billion per annum. (1) What is phoenix activity? It essentially involves one company taking over the business of another company that is liquidated where the controllers of both companies are the same people or their associates. It is important to profile and understand phoenix activity to really understand how it needs to be deterred. In my opinion it is the illegal or “harmful phoenix activity” which has the most profound impact on the economy. Indeed in the rece

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Bankruptcy and Family Trusts – Are They Still Effective?

24/05/2017 by Bruce Gleeson

Family Trusts have and will continue to be used into the future for a variety of purposes, in particular asset protection. Most Family Trusts notably have a Corporate Trustee. As a Registered Bankruptcy Trustee, I am quite often asked by individuals who may be a Director/Shareholder of the Corporate Trustee and/or a Beneficiary of the Family Trust (or discretionary trust) what happens if the individual goes into bankruptcy (either voluntary [themselves] or involuntarily [via the Federal Court])? Ultimately it will significantly depend on the specific circumstances of each case and indeed the Trust Deed, but the Courts have for some time considered and will continue to exercise their minds

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Attitude & Corporate Insolvency Profiles 2016

23/01/2017 by Bruce Gleeson

One of my favourite Winston Churchill’s quotes is so relevant to directors and owners in Micro, Small and Medium Enterprises (“MSME”). That is: “attitude is a little thing that makes a big difference”. In December 2016, ASIC released its annual overview of corporate insolvencies based on statutory reports lodged by external administrators (i.e. predominantly voluntary administrators and liquidators) for the 2016 financial year (see ASIC website 16-436MR). Summarised in the table below are some key trends emerging from the collation of the data over the 2014, 2015 and 2016 financial years. Of particular note, is that MSME’s again dominate the corporate insolvency landscape. Whilst it is

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Directors Vulnerable to Untrustworthy Advisors

04/11/2016 by Bruce Gleeson

As both a Registered Liquidator and Registered Bankruptcy Trustee, I quite often hear about the plight of a family company director or individual who is in financial difficulty being seduced by unlicensed or unregistered supposed professionals (also referred to as pre-insolvency firms) about how best to deal with their difficult financial position, yet only to end in a worse position both financially and emotionally after taking such advice. Such seduction is akin to bait advertising that occurs both online and in other forms of media. It promotes a sense that everything will be sorted out and that the consequences will be very little. By advertising this way, it is effectively taking advan

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Turning ideas of insolvency around

17/10/2016 by Bruce Gleeson

Article as featured in the Acuity October 2016 CA Magazine – Aaron Watson   It’s time people understood the value insolvency professionals add to the economy, say industry representatives. “You weren’t allowed to be bankrupt or insane.” That’s how Brendon Gibson FCA describes a proposed register of New Zealand insolvency practitioners. A partner at KordaMentha since 2003, with insolvency experienced gained over two decades, Gibson is clear that this was not an appropriate way to regulate an increasingly important sector of the professional economy. Gibson is the chair of the Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ), which represen

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