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Releasing debt whilst trading insolvent
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urkidnme View Drop Down
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Posts: 2 		  Quote urkidnme Quote  Post ReplyReply Direct Link To This Post Topic: Releasing debt whilst trading insolvent
    Posted: 03/November/2009 at 23:51
Hi There,
I am working for a company at the moment that has been bought under a Deed of Company Arrangement. To settle the Deed the administrators sold the debtors list to the new owners as some were going to take many months to collect from.
One rather large debt was by a personal friend of the previous owner of the company,the debtor claims to have an email dated 2 months before the company went into administration releasing him from debt,claiming the there is no longer debt. On the company file there is still a rather large debt,still unpaid so my question is this....
If you are trading insolvent (and the company had been for the previous 12 months)I thought I read you were not able to release debt,particulary those that could be declared "preferential" payments.
Anybody have any thoughts on this or can confirm what I feel I read?
Your help will be much appreciated.
Cheers
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rambler1 View Drop Down
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Posts: 803 		  Quote rambler1 Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2009 at 01:29
Insolvent trading is not that easy to define. You say the company was trading insolvently but has this been established by a court or is it just your idea of trading insolvently?

Luke 11 46: Woe unto you also, ye lawyers! For you load men with burdens that are difficult to carry, and you yourselves won't even lift one finger to help carry those burdens.
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MartinO View Drop Down
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Posts: 1802 		  Quote MartinO Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2009 at 08:58
There is the added problem of having sold a debt of no value, if it was already released. I suspect that the release of debt e-mail is a scam and the onus would be on the person owing the debt, that the release is genuine, then it would be up to asic to decide if it was valid.

My gut feeling is that he is going to have to pay.
I am NOT a lawyer. Anything said is NOT legal advice.
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urkidnme View Drop Down
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Posts: 2 		  Quote urkidnme Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2009 at 14:59
The administrators have lodged an insolvancy whatever with ASIC. The previous owner went for $19M and after all the assets sold the capital raised was about $3M....and has just had a $50K settlement offer accepted which annuls him from personal bankruptcy!
The email was probably legit becasue the previous owner was a nutter however he would have known the business was just about to be under threat from creditors, he "sold" his porche unadvertised for half the value to a friend,moved his computer and server to a friends house,placed the other vehicle in his wifes name and an aircraft. He even took $15k from 3 young guys that very day he closed the business and then told them to find themselves a good lawyer. My guess is that the customer (his friend) that owed this money has done a deal and paid him directly.
I am sure I read somewhere that you cant make decisions like this particulary when trading insolvent.I really cant see how you could release a debt in these circumstances by an email.
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MartinO View Drop Down
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Posts: 1802 		  Quote MartinO Quote  Post ReplyReply Direct Link To This Post Posted: 04/November/2009 at 15:11
The court action by ASIC will be able to unwind all these shonky transactions, but it will take time and they will need to be advised and have some evidence. I am not sure of the actual laws but it all smells of fraud, and I expect he will eventually be charged for these dishonest actions.
I am NOT a lawyer. Anything said is NOT legal advice.
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