In a recent client matter we had to determine the circumstances in which a creditor can request the financial documents of a company in liquidation.

Not all creditors who request documents will be given them by the liquidator, especially requests that are deemed to be unreasonable. There are a number of grounds on which a request can be deemed unreasonable such as the document is protected by legal professional privilege, or disclosure could bring about an action for breach of confidence.

Directors of a company in liquidation can rely however on sections 198F and 290 of the Corporations Act 2001 to access company records provided there is a relevant legal proceeding against them.

Cove Legal provide specialist advice to clients facing possible insolvency outcomes or facing actual or threatened ATO debt action. If you are attempting to address director personal liability issues, director penalty notices, garnishee orders, winding up applications, statutory demands or need advice on an insolvency situation generally, speak to us today.

Roger Blow, Principal, Ph: +61 8 6381 0327 or roger@covelegal.com.au

This publication is not intended to provide and does not provide legal advice. You should seek professional legal advice relating to your specific situation(s) before taking any action based upon its contents.

This week saw another significant WA company, RCR Tomlinson, placed into the hands of Administrators. https://www.perthnow.com.au/business/contracting/engineering-firm-rcr-tomlinson-collapses-appoints-administrators-ng-b881028755z

According to recent ASIC figures 2,182 companies across Australia entered into external administration between July to September 2018, a 4.5% increase on the same period in 2017.

The statistics also identify that roughly one third of companies are found to have traded insolvent for over 2 years prior to the appointment of an external administrator. Of most concern is the current rate of 92% of liquidations resulting in nil dividends for unsecured creditors and less than 1% achieving more than 50c in the dollar.

Those statistics need to be considered against the backdrop of more aggressive collection strategies from the ATO, with an increase in the use of garnishee notices, Director Penalty Notices and seeking security over personal director assets before entering into payment plans for company tax debts.

#garnishee #DPN #directorliability