In Australia is the economy as robust as some economists would have us think?

19/06/2013 by Michael Jones

Whilst interest rates in Australia are at historic lows and we remain in relatively good financial shape when compared to other Western Economies, what lies beneath needs to be understood. During the calendar years 2010, 2011 and 2012 we have seen corporate insolvency levels across Australia increase on average at almost 4.5% per annum. Further, many SMEs are also reported continued periods of reduced or static profits. Interestingly, household debt levels also remain at near historical highs, despite some media commentary to the contrary. Will this lead to an increase in personal insolvencies in  Australia? In Western Sydney, for example,  Bankruptcy and other forms of personal inso

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Superannuation a useful way to protect personal assets of individuals

20/05/2013 by Michael Jones

It is true that superannuation funds are ordinarily protected property in the event that an individual becomes bankrupt. There is however and exception to this general principle where a superannuation contribution has been made to defeat the creditors. In particular Section 128 B of the Bankruptcy Act makes specific provision in relation to transfers of property to a super fund where it can be inferred from all of the circumstances that at the time of the transfer, the transferor was or was about to become insolvent. The kinds of transactions envisaged by these provisions relate to unusually large and irregular payments that are outside of the normal scope of the individual’s contributi

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Protecting Inherited Personal Assets In the event of Bankruptcy

06/05/2013 by Michael Jones

One issue that frequently arises in relation to the administration of bankrupt estates is the difficulty of the bankrupt being a beneficiary under a Will. Divisible property is defined broadly in the Bankruptcy Act and it includes, not only property owned by the bankrupt at the time of the bankruptcy, but also property acquired by the bankrupt after bankruptcy up until the time of the discharge, which is usually three years. This is referred to as “after acquired property”. . . .

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Asset Protection for Directors and Business Owners

by Michael Jones

Antecedent transactions Business owners are often anxious about what might happen to their private assets should their business runs into difficulties and ultimately fail. Many individuals contemplate transferring private property into some form of entity separate from the individual (such as a company or a trust), or transferring the property to a close relative or friend in the hope that if something untoward happened to them creditors would not be able to access the property. Unfortunately the Australian Bankruptcy Act anticipates this kind of conduct and in certain circumstances affords provisions for a subsequent Bankruptcy Trustee to reverse the effect of a transfer. In

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Personal Insolvency – A Potted Summary

18/03/2013 by Michael Jones

This is a very basic summary of the current regime in Australia applicable to personal insolvency and Bankruptcy of Individuals . . .

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ATO – Insolvency and the Tax Man Jekyll & Hyde

13/12/2012 by Michael Jones

The title of this paper is named after the character created by Robert Louis Stevenson commonly known today as “The strange case of Dr Jekyll and Mr Hyde”.  The Jekyll and Hyde description usually refers to a person with a split personality, one good and one bad.  So it is that in many cases the Australian Taxation Office (The ATO) seems to have a Jekyll and Hyde approach when it comes to tax payers who are unable to pay their debts due to insolvency. WHY IS THE ATO THE CENTRE OF ATTENTION When businesses get into financial difficulty, cash flow becomes extremely tight.  The simple principle is that the noisy cog gets the oil, thus employees are paid before critical suppliers, c

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President’s Award

06/12/2012 by Michael Jones

  Business Recovery Specialists Jones Partners Receives Prestigious President’s Award From Civil Contractors Federation of Australia (NSW) Branch On the 16th November, 2012 I received a coveted award from the Civil Contractors Federation of Australia (NSW) Branch.  The “President’s Award” was presented in recognition of Jones Partners’ commitment to educating and consulting with the Civil Contractors Federation and the industry in general.  Business recovery specialists, Jones Partners understand the trauma business owners suffer in the face of financial adversity. The award also signifies Jones Partners’ dedication to serving businesses facing difficulties due t

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Ponzi Scheme

13/11/2012 by Michael Jones

Overview In the 1920’s an Italian emigrant in the United States by the name of Charles Ponzi perpetrated a number of frauds against fellow Italians emigrants in the Boston area in the United States of America. The frauds committed by Ponzi were many and various but his most successful schemes related to the genre that now bears his name. The essential element in the Ponzi scheme involves the offer and often payment of extremely high returns from doubtful sources in circumstances particularly where the investors who come into the scheme at the beginning are paid their investment returns using funds raised from investors who subsequently come into the scheme. Mr. Ponzi did not

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Phoenix Fire Reignites

by Michael Jones

The Phoenix Fire Reignites Over recent years there has been growing concern about the increasing level of the so calledPhoenixactivity in relation to the use of the corporate entity.  The Australian Government has recently issued a discussion paper on the impact of this kind of activity and a number of recommendations have been foreshadowed.  It is important to note that the discussion paper distinguishes between what it refers to as fraudulent Phoenix activity which involves usually evasion of taxes and other liabilities such as employee entitlements through the deliberate systematic and sometimes cyclic liquidation of related corporate entities as opposed to the legitimate use of the co

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The Insolvency Trap

08/11/2012 by Michael Jones

Why Company’s fail It is very clear from statistics produced by the ASIC that the vast majority of companies fail as a result of poor strategic management.  Other reasons provided by the ASIC include poor cash flow management, inappropriate books and records and trading losses.  However it can be argued that all of the above descriptions really mean the same thing that is poor management.  This is good news in a way in that it means it is not inevitable that businesses fail.  Businesses fail because of the lack of the management skills of the directors and these management skills can be improved if directors focus on the appropriate details. The Unthinkable For most small business o

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