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Fact Sheets |
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| Types of Insolvency Administrations | |
| Bankruptcy | Bankruptcy is a legal process where a trustee is appointed to administer a person's affairs so as to provide a fair distribution of that person's assets to their creditors. |
| Control before Bankruptcy | The Bankruptcy Act provides two ways for creditors to protect their interests and stop the debtor's assets from being disbursed or hidden. |
| Liquidation | Liquidation is a process for the winding up of a company's affairs in order to provide for a dismantling of a company's affairs and a fair distribution to creditors. |
| Members Voluntary Winding Up | A Members Voluntary Winding Up is the process of winding up a solvent company, done when the members no longer wish to retain the company structure. |
| Part X | Part X (Part 10) is a part of the Bankruptcy Act that allows a debtor to enter into an arrangement with their creditors without being made bankrupt. |
| Part IX | Part IX (Part 9) is a part of the Bankruptcy Act that allows a debtor to enter into to an arrangement with their creditors without being made bankrupt. |
| Provisional Liquidation | A provisional liquidation is the Court appointment of a liquidator to a company in the period between the filing of the application to wind up the company and the Court hearing the application. |
| Section 73 Proposals | Section 73 provides a bankrupt with the opportunity to make a proposal to his or her creditors to satisfy their debts and have their bankruptcy annulled. |
| Secured Appointments | Creditors holding securities over a debtor's assets may exercise that security and appoint someone to take control of that asset and sell it. |
| Voluntary Administration | Voluntary Administration is designed to assist companies to either
come to a formal arrangement with their creditors to pay their debts, or are quickly and inexpensively placed into
liquidation. |
| Insolvency Topics | |
| 588FH Preferences | Section 588FH allows liquidators to recover money from an entity related to the company, when a creditor has received a preferential payment and that related entity was released from an obligation to that creditor. |
| Bankruptcy & the Family Home | How the Bankruptcy Act applies to a bankrupt's family home is often misunderstood. The loss of the bankrupt's family home is usually felt more intensely than the loss of any other asset. |
| Determining Solvency | Proving the insolvency of a company or of a person (an 'entity') at a particular point in time is usually one of the most difficult and time consuming tasks of an external administrator. |
| Directors' Liabilities | Directors can become liable for company debts through Insolvent Trading; Unreasonable Director-Related Transactions; Taxation Debts; Personal Guarantees; and if they are Directors of Corporate Trustees. |
| Director Related Transactions | Liquidators investigate transactions when they believe that they were not beneficial to the company, particularly when they involve parties related to the company. |
| Dividends | The aim in most external administrators is to distribute the debtor's property amongst the creditors of the estate. |
| Employee Entitlements | Employees are usually the first creditors to be effected as their jobs will be at risk and there is a chance that some of their outstanding entitlements will not be covered by GEERS. |
| Ending a Liquidation | A liquidation usually ends with the deregistration of the company. However, a liquidation may end through a decision of the directors and the liquidator, or an Order of the Court. |
| Getting out of Bankruptcy |
An annulment is a complete undoing of the bankruptcy, and.can only happen if the bankrupt; pays all of the debts and costs of the estate; has a section 73 proposal accepted; or the Court so orders. |
| Income Contributions | A bankrupt may be liable to make a contribution to their estate from income earned during their bankruptcy so that some of the rewards from the bankrupt's efforts during the bankruptcy period can be used to satisfy their past debts. |
| Indicators of Insolvency | Because the issue of insolvency frequently arises, some Judges have developed indicators of insolvency that they look for when considering the question. |
| Insolvent Trading | This is a claim for compensation made against a director of a company in liquidation where the directors should have stopped the company from incurring those debts. |
| Landlord Rights | The end result of most administrations will either be that: (a) the tenant will leave the premises; or (b) its financial affairs will be rectified and the tenancy will continue. |
| Lending Money | Everyone about to lend money to someone will want to know that they have the best chance of being repaid, or if should the loan go bad, that they can recover the maximum amount possible. |
| Meetings of Creditors | Both the Corporations Act and the Bankruptcy Act have strict rules about how meetings of creditors are to be run and how issues are to be decided. |
| Objections to Discharge | There are times when it would be in the interest of the creditors or the general public that the bankrupt not be discharged at the usual time. |
| Preferences in Bankruptcy | Trustees may seek to recover payments made to a creditor prior to the bankruptcy, where that creditor has received a preference or advantage over other creditors. |
| Preferences in Liquidations | Liquidators may seek to recover payments made to a creditor prior to the liquidation, where that creditor has received a preference or advantage over other creditors. |
| Proofs of Debt & Securities | Creditors holding securities over assets must take care that they do not void their security by lodging a proof of debt incorrectly. |
| Public Examinations | A public examination is the common name given to the process of an external administrator formally examining parties under the Corporations Act or the Bankruptcy Act. |
| Retention of Title | A retention of title clause provides that ownership of the goods supplied does not pass to the customer until full payment has been made - the supplier retains title. |
| Revesting of Property | Revesting is the transfer of property that had vested in a bankruptcy trustee back to the bankrupt after the end of the bankruptcy if the bankruptcy trustee has not realized those assets. |
| Securities over Assets | A security is a pledge of an asset to a particular creditor to support a debt. A creditor that holds a security is know as a secured creditor. The asset is known as being "charged" and securities are also known as charges. |
| Subcontractor's Charges | A subcontractor's charge is a statutory security granted to certain parties under the Subcontractors' Charges Act. The charge secures payment of monies owed to subcontractors. |
| Uncommercial Transactions | Liquidators investigate and sometimes seek to void transactions that they believe were either not beneficial to, or was detrimental to, the company. |
| Void Corporate Dividends |
Directors may become liable to compensate a company if a dividend was paid but not out of profits or if the dividend was paid while the company was insolvent. |
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Fraud Topics |
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| Advance Fee Fraud | The goal of Advance Fee fraud is to get the victim to pay an amount of money in advance of getting a product or service. |
| Bribery | Bribery is the offering, giving or receiving of something of value in exchange for gaining undue influence in a decision making process. |
| Cash Frauds | Cash frauds are the misappropriation or theft of money in the form of cash or cheques. There are a number of forms of cash frauds. |
| Conflicts of Interest | A conflict of interest arises when an employee receives an undisclosed benefit in relation to a transaction he conducts for their employer. |
| Credit Card Fraud | Credit card fraud is a billion dollar a year problem, and it will keep increasing as credit cards become more abundant.. |
| Debt Factoring Fraud | Factoring in its most simple terms is the raising of finance against trade debtors. It is a method of obtaining money from the debtor's ledger, before the debt is collected. |
| Financial Statement Fraud | The aim of financial statement fraud is to create a false impression of the financial position of the company. |
| Fraud in General | Fraud is theft by deception. It is a covert act. Theft without deception is just theft. |
| Fraud Risk Analysis | Fraud risk analysis is
an assessment of the likelihood of a fraud being committed, and what can and should be done about it and whether that action is commercial. |
| Identity Theft | Identity theft or identity fraud is the act of assuming someone else's identity for the purpose of financially benefiting from the use of that name. |
| Internet Frauds | Internet fraud is fraud committed against people over the Internet, either started through email communications, or using real or false Internet pages. |
| Inventory Fraud | Inventory fraud is the misappropriation of inventory items by an employee from an employer. |
| Land Sale Fraud | Land Sale fraud is a fraud related to the purchase or the sale of real property. |
| Leasing Fraud | Asset leasing fraud is fraud committed against finance companies by falsifying application documentation. |
| Payroll Fraud | This is fraud that attacks the payroll system of a business that pays salaries and wages, as well as claims for expense reimbursement. |
| Ponzi Frauds | The name 'Ponzi Scheme' has been given to investment frauds based on his system. |
| Profiling a Fraudster | Occupational fraudsters come in all shapes and sizes, but some people are more prone to commit fraud than others. |
| Pyramid Schemes |
Pyramid schemes are investment schemes that people pay to enter the scheme and get paid for getting other people to enter the scheme. |
| Vendor Finance Fraud | This is a fraud committed by a purchaser of a property against the vendor by manipulating a vendor finance arrangement. |
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