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Research
The Future of
Liquidation and
Bankruptcy
Breakthrough



  Creditors will significantly improve their
  prospects of recovery by applying PPB
  Advisory Screening Processes before
  commencing or proceeding with winding
  up or bankruptcy proceedings




© PPB Pty Ltd 2011                             2
PPB Advisory Liquidation Screen

1. Real Property Search on debtor company
2. PPB Advisory Bankruptcy Scorecard for each director of the
   debtor company
3. Substantial Trading Enterprise test on debtor company


PPB Advisory Official Liquidation Decision Tree is annexed.


PPB Advisory’s Statutory Recovery Team has created these tests
by researching the source of all dividends it has paid in liquidations
since 1 July 2008.




© PPB Pty Ltd 2011                                                       3
PPB Advisory Bankruptcy Scorecard

1. Real Property Assets
2. Income Contributions
3. Business Plant and Equipment
4. Other Known Assets


PPB Advisory has successfully applied the annexed Bankruptcy
Scorecard since September 2010.




© PPB Pty Ltd 2011                                             4
Results of the Bankruptcy Scorecard
Process

      Data*            October 2009 to April 2010            October 2010 to April 2011             Result
    Matters                         189                                   47                   A decrease of 142
   Appointed                                                                                        matters
  Recoverable                      38%                                   57%                Increase in recoverable
    Matters                                                                                         matters
    Consents                        280                                   57                   Decrease in 223
                                                                                                 Consents




   The Bankruptcy Scorecard has significantly reduced the average write off for
   matters in bankruptcy by an average of approximately $8,500.
   Recoverability of matters has increased by nearly 20% since the implementation
   of the Scorecard.

   *Data compared for the periods October 2009 to April 2010 & October 2010 to April 2011




© PPB Pty Ltd 2011                                                                                            5
Benefits of Screening

Informed decision making for a portfolio of debts resulting in fewer
petitions for winding up and bankruptcy


Decreased expenditure on petitions. Savings can be redeployed for
more complex matters such as policing non-compliance and phoenix
activity


Returns to creditors from a higher percentage of appointments


Stronger relationships between creditors, advisors and IPs due to
better value for money




© PPB Pty Ltd 2011                                                     6
Background
Section                   Page

Trends and Implications      8

Dividend Research           12

Law Reform                  20
Trends and Implications
Summary of 2010 Sharing Sessions

Implications for a future without screening

More assetless matters with higher costs
Poor value for money in appointing a liquidator or trustee with
limited likelihood of recovery
Reluctance by IPs to take on appointments due to increased costs
of compliance
Public concern about the high costs of compliance
Relationships strained between Creditors, Advisors and IPs




© PPB Pty Ltd 2011                                                 9
Current Trends
                                             Trends                                                         Effect
                     Increase focus on compliance with privacy rules                Increased costs of compliance and investigations for
                     Compulsory mediations                                           Insolvency Practitioner (“IP”)
    Social




                     Costs of dealing with impecunious and self- represented        Scope limitation on investigations
                     Increased scrutiny by Courts and Regulators                    Costs borne by creditors and IP’s for vexatious litigants
                     Less trust in professionals                                    Unjustified complaints
                                                                                     Less cooperation from debtors

                     Increase in filing fees                                        Fewer appointments (particularly bankruptcy)
    Legislation




                     Changes in collection policies                                 More applications for Bankruptcy or Winding up due to
                     Legislation changes on trustee reporting                        costs
                     Increase in bankruptcy notice threshold                        Expensive to complete administrations
                     National credit code                                           Increase costs incurred by creditors in complying with
                     Alternative dispute resolution                                  legislation


                                                                                 
    Economic




                      Focus on business case for winding up                           More decisions not to proceed with IP appointment
                     Increases in sales of debtor books                             Limited ability to refinance property to settle IP claims
                     Reduction in borrowing capacity                                Fewer appointments with assets and likelihood of return
                     Over geared from GFC – more shortfalls                          to creditors


                     Disclosure requirements around remuneration and                Time focused on compliance rather than adding
    Regulation




                      independence                                                    value/results
                     Senate committee licensing and flying squads                   Small matters uneconomical for IPs
                     Black letter bankruptcy regulation reviews                     IPs leaving market
                     Court decisions in One.tel1 and Maxwell Smith2                 Government concern about high costs3

1 Onefone Australia Pty Limited v One.Tel Ltd [2010] NSWSC 1120 (1October 2010)
2 Donnelly v Maxwell‐Smith [2010] FCAFC 154
3 IPA Submission to Treasury 27 April 2011

      © PPB Pty Ltd 2011                                                                                                                 10
Further Evidence
• Strike rate4 for administrations for the year ended 30 June 2010 has fallen to 32% from
  44% for the year ended 30 June 2009.
• Average fees taken drawn by private trustees for the 5 years ended 30 June 2010 has
  reduced to approximately $10,000 per estate5 despite upward pressure on costs and
  increases in charge out rates over the same period.
• 40% of liquidations are totally assetless, 61% have estimated assets less than $10,000.
  93% have estimated dividends of zero6.




   4. Where PPB Advisory has made any recovery
   5. Inspector General’s 2010 report on Personal Insolvency
   6. ASIC Insolvency Statistics Report 225

 © PPB Pty Ltd 2011                                                                11
Dividend Research
PPB Advisory Dividend Research

                     Major Source of Funds                                                           Number                      %
         1           Real Property                                                                           4                    7
         2           Director Funded1                                                                       24                  41
         3           Business Assets 2                                                                      12                  21
         3           Cash at Bank                                                                           13                  22
         3           Preferences                                                                             5                    9
                                                     Total                                                  58                 100

  Since 1 July 2008 PPB Advisory has paid 42 dividends to creditors in
  Official Liquidations
  The sample contains 58 sources of funds because several dividends had
  more than 1 major source.

  1 Director Funded dividends combine sources of Loan Account Recoveries, Insolvent Trading, Asset buybacks, terminations and voluntary
  contributions.
  2Business Assets combine Debtors, Plant and Equipment and Inventory.


© PPB Pty Ltd 2011                                                                                                                        13
PPB Advisory Dividend Research
1. Real Property
Whilst the occurrence of Real Property in Official Liquidations is
rare, its value is so material that the prospect of a dividend is high.
Real Property Searches are quick, affordable and accurate.


2. Director Funded
PPB Advisory successfully settles with directors for insolvent
trading, loan accounts, transfers of business and assets together
with many terminations.
These recoveries combine some or all of the above components so
it is not possible or practical to accurately separate these sources.
In order to generate a return to creditors, directors must have
access to one of three sources of funds:
    a. Their own assets
    b. Company assets
    c. Third party assets.

© PPB Pty Ltd 2011                                                        14
PPB Advisory Dividend Research
a. Own Assets
   PPB Advisory Bankruptcy Scorecard will predict likely recovery
   from directors’ personal assets.
b. Company Assets
   Often directors may refinance, pledge or sell company assets
   to settle with the liquidator.
   The Substantial Trading Enterprise test therefore applies to this
   category.
c. Third Parties
   Third Parties (often related) may provide funds to directors to
   generate a return to creditors.
   To predict cases where this behaviour is likely, it is assumed
   that the directors behave in self interest and will benefit by
   procuring funds from a third party (for example, to preserve
   the business or with a genuine prospect of repaying the
   third party from future profits).
   Therefore the Substantial Trading Enterprise test also applies
   to this category.


© PPB Pty Ltd 2011                                                     15
Pre-Liquidation Tests
3. Substantial Trading Enterprise
The presence of a Substantial Trading Enterprise is the best
indicator that the following sources of funds may exist.
    a. Debtors, Plant & Equipment
         Book Debts and Plant and Equipment were the most
         commonly recovered business assets which generate a
         return.
    b. Cash at Bank
         Usual sources of Cash at Bank are trade receipts, debtor
         receipts and business or asset sales. Increasingly these
         funds arrive by EFT.
         It is assumed that the low cost of realisation of Cash at Bank
         is the reason it features so significantly in dividend returns.
    c. Preferences
         Preference recoveries require the payment of a creditor
         within 6 months of the winding up. A trading enterprise at the
         date of the petition increases the likelihood of voidable
         payments.
© PPB Pty Ltd 2011                                                         16
Substantial Trading Enterprise test
Because of a lack of publicly available searches, there is skill
involved in determining whether a company contains a Substantial
Trading Enterprise.
Indicators of Substantial Business Enterprise include:


•   Business Premises
•   Number of Employees
•   Turnover
•   Plant and Equipment
•   Major Customers/contracts
•   Bank Accounts
•   Registered Charges/ PPSA Register




© PPB Pty Ltd 2011                                                 17
Substantial Trading Enterprise
Creditors are uniquely placed to possess or access significant
information about the trading activities of a company via:
• Credit Applications
• Sales/purchases
• Payment History
• Day to Day Contact
• Statutory Returns (e.g. declarations, BAS etc.)
• Direct enquiry


A challenge for creditors is to make full use of that information in
their recovery processes to make better-informed decisions about
whether there is a Substantial Trading Enterprise and which
companies to wind up.




© PPB Pty Ltd 2011                                                     18
Substantial Trading Enterprise




Certain types of company are not likely to have a Substantial
Trading Enterprise, for example:

• Sole employee companies (tradesmen, couriers etc.)
• Labour hire companies
• Deregistered and/or strike-off in progress




© PPB Pty Ltd 2011                                              19
Law Reform
Suggested Law Reform
 To remain viable as a means of dealing with assetless companies PPB Advisory
 seeks the following changes to Official Liquidation law and practice (in bold)

Task                            Current Position                                                      Desired Position

                                Lodgement with ASIC                                                   Lodgement with ASIC

Notice of Appointment           Advertisement in paper                                                Internet advertisement

                                Issue demand to officer(s) to lodge                                   Issue demand to officer(s) to lodge
                                If no reply from initial demand, issue a follow up reminder           ASIC to follow up officer(s) with compliance notice.
Report as to Affairs
                                Reporting offence to ASIC and seeking their assistance                ASIC to prosecute following compliance notice
                                On receipt of RATA, lodge with ASIC and Court                         On receipt of RATA, lodge with ASIC
                                Prepare and lodge report with ASIC within two months of receipt       Not required
Section 476 report (Form 564)
                                Issue demand on officer(s)/external accountants to deliver books      Issue demand on officer(s)/external accountants to deliver books and
                                and records to Liquidator                                             records to Liquidator
                                If no reply from initial demand, issue a follow up reminder           ASIC to follow up officer(s) with compliance notice
Books and records
                                Reporting offence to ASIC and seeking their assistance                ASIC to prosecute following compliance notice
                                Investigations undertaken to identify assets, voidable transactions   Investigations to be limited to identify assets or voidable
Investigations                  and offences                                                          transactions where the Liquidator forms the opinion that there
                                                                                                      will be realisations or recoveries
                                Report to be lodged with ASIC if investigations identify offences     The report should be prepared only where the Liquidator has
EX01 report                     committed by an officer(s) or company is unable to pay a dividend     formed a view that serious offences have been committed
                                of 50 cents or more to unsecured creditors
                                Reports prepared in situations where ASIC have requested a            Report to be prepared only when fully funded by ASIC
EX02/EX03 reports               supplementary report
                                Required to convene a meeting of creditors to approve                 Whilst to inform/update creditors, minimum remuneration to be
Reports to Creditors            remuneration, compromise of debt or enter into to settlement          drawn without resolution of creditors
                                agreements
                                Send out the Report to all known creditors                            Email and website
                                Report to Creditors is prepared and mailed to creditors containing    Notice of Meeting by email and website
Creditor’s meetings             the Notice of Meeting
                                Creditor attendance in person or by proxy                             Meetings to be held by circular resolutions
                                To be lodged on every six months on all appointments                  To be lodged only where there have been transactions
Form 524


© PPB Pty Ltd 2011                                                                                                                                         21
Annexures
                                                                  PPB Advisory Liquidation Screen – Decision Tree

                                                                  PPB Advisory Bankruptcy Scorecard

                                                                  IPA Insolvency Reform submissions to Treasury




Important:This information is not advice.Readers should not act solely on the basis of information contained in this document.We recommend that formal or independent advice be sought before acting in the areas covered herein.May 2011
PPB Advisory liquidation screen
Decision tree


        1. Company LPI             Does company
                                                             Yes
             search               own real property?


                           No



         2. PPB Advisory
                                  Do Directors have                Proceed with
           bankruptcy                                  Yes
                                      assets?                       winding up
            scorecard

                                         No




                                    3. Substantial
          Write off debt   No
                                  trading enterprise         Yes
Risk score card

Debtor name

Referral solicitor

Contact at referral solicitor


Please complete all categories – (Please type in answers in whole, eg TRUE not T)

 Category A – Real property                                                                   Answer   PPB rating
 Number of encumbered properites
 Number of unencumbered properties
 Number of caveats on the property (Excluding Caveat by Petitioning Creditor)
 Number of caveats on the property by Petitioning Creditor
 Number of mortgages over the property
 Have proceedings been commenced by the mortgagee? (True or False)
 Is the property being rented? (True or False)
 Total score (accept if > = 5)




 Category B – Income                                                                          Answer   PPB rating
 Are you aware of the debtors current employment / income / pension status? (True or False)
 Is the debtor’s income between $75,000 and $100,000? (True or False)
 Is the debtor’s income greater than $100,000? (True or False)
 Is the debtor’s employer a related party? (True or False)
 Total score (accept if > = 5)




 Category C – Business                                                                        Answer   PPB rating
 Does the debtor currently operate a business? (True or False)
 What is the nature of the business? (Sole trader = True otherwise False)
 Are you are aware of whether the business has unencumbered debtors or plant and equipment?
 (True or False)
 Total score (accept if > = 5)
Category D – Other assets / matters                                                                                                         Answer            PPB rating
Are there any other assets with a value greater than $10,000? (True or False)
Is the debtor a vexacious / litigious person? (True or False)
Is the debtor self represented? (True or False)
Number of companies the debtor holds shareholdings?
Total score (accept if > = 5)


Total Score ( Accept Appointment if any Category is >= 5)                                                                                   Answer            PPB rating
Total rating - CAT A
Total rating - CAT B
Total rating - CAT C
Total rating - CAT D
Is consent granted?

Contacts
                Scott Pascoe                                                 Andrew Scott                                                 Simon Theobold
                Partner                                                      Senior Manager                                               Partner
                t: +61 2 8116 3202                                           t: +61 2 8116 3063                                           t: +61 8 9382 8933
                e: spascoe@ppbadvisory.com                                   e: ascott@ppbadvisory.com                                    e: stheobold@ppbadvisory.com




                Geoff Granger                                                Warren White                                                 Peter Macks
                Director                                                     Partner                                                      Partner
                t: +61 2 8116 3224                                           t: +61 3 9269 4225                                           t: +61 8 8211 7800
                e: ggranger@ppbadvisory.com                                  e: wwhite@ppbadvisory.com                                    e: pmacks@ppbsa.com.au




                Mark Roufeil                                                 David Leigh
                Director                                                     Partner
                t: +61 2 8116 3000                                           t: +61 7 3222 6800
                e: mroufeil@ppbadvisory.com                                  e: dleigh@ppbadvisory.com




                                                                                                                                    www.ppbadvisory.com
Important: This information is not advice. Readers should not act solely on the basis of information contained in this document. We recommend that formal or independent advice
be sought before acting in the areas covered herein. 00075STAT. April 2011.

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PPB Advisory Research The Future Of Liquidation And Bankruptcy

  • 2. Breakthrough Creditors will significantly improve their prospects of recovery by applying PPB Advisory Screening Processes before commencing or proceeding with winding up or bankruptcy proceedings © PPB Pty Ltd 2011 2
  • 3. PPB Advisory Liquidation Screen 1. Real Property Search on debtor company 2. PPB Advisory Bankruptcy Scorecard for each director of the debtor company 3. Substantial Trading Enterprise test on debtor company PPB Advisory Official Liquidation Decision Tree is annexed. PPB Advisory’s Statutory Recovery Team has created these tests by researching the source of all dividends it has paid in liquidations since 1 July 2008. © PPB Pty Ltd 2011 3
  • 4. PPB Advisory Bankruptcy Scorecard 1. Real Property Assets 2. Income Contributions 3. Business Plant and Equipment 4. Other Known Assets PPB Advisory has successfully applied the annexed Bankruptcy Scorecard since September 2010. © PPB Pty Ltd 2011 4
  • 5. Results of the Bankruptcy Scorecard Process Data* October 2009 to April 2010 October 2010 to April 2011 Result Matters 189 47 A decrease of 142 Appointed matters Recoverable 38% 57% Increase in recoverable Matters matters Consents 280 57 Decrease in 223 Consents The Bankruptcy Scorecard has significantly reduced the average write off for matters in bankruptcy by an average of approximately $8,500. Recoverability of matters has increased by nearly 20% since the implementation of the Scorecard. *Data compared for the periods October 2009 to April 2010 & October 2010 to April 2011 © PPB Pty Ltd 2011 5
  • 6. Benefits of Screening Informed decision making for a portfolio of debts resulting in fewer petitions for winding up and bankruptcy Decreased expenditure on petitions. Savings can be redeployed for more complex matters such as policing non-compliance and phoenix activity Returns to creditors from a higher percentage of appointments Stronger relationships between creditors, advisors and IPs due to better value for money © PPB Pty Ltd 2011 6
  • 7. Background Section Page Trends and Implications 8 Dividend Research 12 Law Reform 20
  • 9. Summary of 2010 Sharing Sessions Implications for a future without screening More assetless matters with higher costs Poor value for money in appointing a liquidator or trustee with limited likelihood of recovery Reluctance by IPs to take on appointments due to increased costs of compliance Public concern about the high costs of compliance Relationships strained between Creditors, Advisors and IPs © PPB Pty Ltd 2011 9
  • 10. Current Trends Trends Effect  Increase focus on compliance with privacy rules  Increased costs of compliance and investigations for  Compulsory mediations Insolvency Practitioner (“IP”) Social  Costs of dealing with impecunious and self- represented  Scope limitation on investigations  Increased scrutiny by Courts and Regulators  Costs borne by creditors and IP’s for vexatious litigants  Less trust in professionals  Unjustified complaints  Less cooperation from debtors  Increase in filing fees  Fewer appointments (particularly bankruptcy) Legislation  Changes in collection policies  More applications for Bankruptcy or Winding up due to  Legislation changes on trustee reporting costs  Increase in bankruptcy notice threshold  Expensive to complete administrations  National credit code  Increase costs incurred by creditors in complying with  Alternative dispute resolution legislation   Economic Focus on business case for winding up More decisions not to proceed with IP appointment  Increases in sales of debtor books  Limited ability to refinance property to settle IP claims  Reduction in borrowing capacity  Fewer appointments with assets and likelihood of return  Over geared from GFC – more shortfalls to creditors  Disclosure requirements around remuneration and  Time focused on compliance rather than adding Regulation independence value/results  Senate committee licensing and flying squads  Small matters uneconomical for IPs  Black letter bankruptcy regulation reviews  IPs leaving market  Court decisions in One.tel1 and Maxwell Smith2  Government concern about high costs3 1 Onefone Australia Pty Limited v One.Tel Ltd [2010] NSWSC 1120 (1October 2010) 2 Donnelly v Maxwell‐Smith [2010] FCAFC 154 3 IPA Submission to Treasury 27 April 2011 © PPB Pty Ltd 2011 10
  • 11. Further Evidence • Strike rate4 for administrations for the year ended 30 June 2010 has fallen to 32% from 44% for the year ended 30 June 2009. • Average fees taken drawn by private trustees for the 5 years ended 30 June 2010 has reduced to approximately $10,000 per estate5 despite upward pressure on costs and increases in charge out rates over the same period. • 40% of liquidations are totally assetless, 61% have estimated assets less than $10,000. 93% have estimated dividends of zero6. 4. Where PPB Advisory has made any recovery 5. Inspector General’s 2010 report on Personal Insolvency 6. ASIC Insolvency Statistics Report 225 © PPB Pty Ltd 2011 11
  • 13. PPB Advisory Dividend Research Major Source of Funds Number % 1 Real Property 4 7 2 Director Funded1 24 41 3 Business Assets 2 12 21 3 Cash at Bank 13 22 3 Preferences 5 9 Total 58 100 Since 1 July 2008 PPB Advisory has paid 42 dividends to creditors in Official Liquidations The sample contains 58 sources of funds because several dividends had more than 1 major source. 1 Director Funded dividends combine sources of Loan Account Recoveries, Insolvent Trading, Asset buybacks, terminations and voluntary contributions. 2Business Assets combine Debtors, Plant and Equipment and Inventory. © PPB Pty Ltd 2011 13
  • 14. PPB Advisory Dividend Research 1. Real Property Whilst the occurrence of Real Property in Official Liquidations is rare, its value is so material that the prospect of a dividend is high. Real Property Searches are quick, affordable and accurate. 2. Director Funded PPB Advisory successfully settles with directors for insolvent trading, loan accounts, transfers of business and assets together with many terminations. These recoveries combine some or all of the above components so it is not possible or practical to accurately separate these sources. In order to generate a return to creditors, directors must have access to one of three sources of funds: a. Their own assets b. Company assets c. Third party assets. © PPB Pty Ltd 2011 14
  • 15. PPB Advisory Dividend Research a. Own Assets PPB Advisory Bankruptcy Scorecard will predict likely recovery from directors’ personal assets. b. Company Assets Often directors may refinance, pledge or sell company assets to settle with the liquidator. The Substantial Trading Enterprise test therefore applies to this category. c. Third Parties Third Parties (often related) may provide funds to directors to generate a return to creditors. To predict cases where this behaviour is likely, it is assumed that the directors behave in self interest and will benefit by procuring funds from a third party (for example, to preserve the business or with a genuine prospect of repaying the third party from future profits). Therefore the Substantial Trading Enterprise test also applies to this category. © PPB Pty Ltd 2011 15
  • 16. Pre-Liquidation Tests 3. Substantial Trading Enterprise The presence of a Substantial Trading Enterprise is the best indicator that the following sources of funds may exist. a. Debtors, Plant & Equipment Book Debts and Plant and Equipment were the most commonly recovered business assets which generate a return. b. Cash at Bank Usual sources of Cash at Bank are trade receipts, debtor receipts and business or asset sales. Increasingly these funds arrive by EFT. It is assumed that the low cost of realisation of Cash at Bank is the reason it features so significantly in dividend returns. c. Preferences Preference recoveries require the payment of a creditor within 6 months of the winding up. A trading enterprise at the date of the petition increases the likelihood of voidable payments. © PPB Pty Ltd 2011 16
  • 17. Substantial Trading Enterprise test Because of a lack of publicly available searches, there is skill involved in determining whether a company contains a Substantial Trading Enterprise. Indicators of Substantial Business Enterprise include: • Business Premises • Number of Employees • Turnover • Plant and Equipment • Major Customers/contracts • Bank Accounts • Registered Charges/ PPSA Register © PPB Pty Ltd 2011 17
  • 18. Substantial Trading Enterprise Creditors are uniquely placed to possess or access significant information about the trading activities of a company via: • Credit Applications • Sales/purchases • Payment History • Day to Day Contact • Statutory Returns (e.g. declarations, BAS etc.) • Direct enquiry A challenge for creditors is to make full use of that information in their recovery processes to make better-informed decisions about whether there is a Substantial Trading Enterprise and which companies to wind up. © PPB Pty Ltd 2011 18
  • 19. Substantial Trading Enterprise Certain types of company are not likely to have a Substantial Trading Enterprise, for example: • Sole employee companies (tradesmen, couriers etc.) • Labour hire companies • Deregistered and/or strike-off in progress © PPB Pty Ltd 2011 19
  • 21. Suggested Law Reform To remain viable as a means of dealing with assetless companies PPB Advisory seeks the following changes to Official Liquidation law and practice (in bold) Task Current Position Desired Position Lodgement with ASIC Lodgement with ASIC Notice of Appointment Advertisement in paper Internet advertisement Issue demand to officer(s) to lodge Issue demand to officer(s) to lodge If no reply from initial demand, issue a follow up reminder ASIC to follow up officer(s) with compliance notice. Report as to Affairs Reporting offence to ASIC and seeking their assistance ASIC to prosecute following compliance notice On receipt of RATA, lodge with ASIC and Court On receipt of RATA, lodge with ASIC Prepare and lodge report with ASIC within two months of receipt Not required Section 476 report (Form 564) Issue demand on officer(s)/external accountants to deliver books Issue demand on officer(s)/external accountants to deliver books and and records to Liquidator records to Liquidator If no reply from initial demand, issue a follow up reminder ASIC to follow up officer(s) with compliance notice Books and records Reporting offence to ASIC and seeking their assistance ASIC to prosecute following compliance notice Investigations undertaken to identify assets, voidable transactions Investigations to be limited to identify assets or voidable Investigations and offences transactions where the Liquidator forms the opinion that there will be realisations or recoveries Report to be lodged with ASIC if investigations identify offences The report should be prepared only where the Liquidator has EX01 report committed by an officer(s) or company is unable to pay a dividend formed a view that serious offences have been committed of 50 cents or more to unsecured creditors Reports prepared in situations where ASIC have requested a Report to be prepared only when fully funded by ASIC EX02/EX03 reports supplementary report Required to convene a meeting of creditors to approve Whilst to inform/update creditors, minimum remuneration to be Reports to Creditors remuneration, compromise of debt or enter into to settlement drawn without resolution of creditors agreements Send out the Report to all known creditors Email and website Report to Creditors is prepared and mailed to creditors containing Notice of Meeting by email and website Creditor’s meetings the Notice of Meeting Creditor attendance in person or by proxy Meetings to be held by circular resolutions To be lodged on every six months on all appointments To be lodged only where there have been transactions Form 524 © PPB Pty Ltd 2011 21
  • 22. Annexures PPB Advisory Liquidation Screen – Decision Tree PPB Advisory Bankruptcy Scorecard IPA Insolvency Reform submissions to Treasury Important:This information is not advice.Readers should not act solely on the basis of information contained in this document.We recommend that formal or independent advice be sought before acting in the areas covered herein.May 2011
  • 23. PPB Advisory liquidation screen Decision tree 1. Company LPI Does company Yes search own real property? No 2. PPB Advisory Do Directors have Proceed with bankruptcy Yes assets? winding up scorecard No 3. Substantial Write off debt No trading enterprise Yes
  • 24. Risk score card Debtor name Referral solicitor Contact at referral solicitor Please complete all categories – (Please type in answers in whole, eg TRUE not T) Category A – Real property Answer PPB rating Number of encumbered properites Number of unencumbered properties Number of caveats on the property (Excluding Caveat by Petitioning Creditor) Number of caveats on the property by Petitioning Creditor Number of mortgages over the property Have proceedings been commenced by the mortgagee? (True or False) Is the property being rented? (True or False) Total score (accept if > = 5) Category B – Income Answer PPB rating Are you aware of the debtors current employment / income / pension status? (True or False) Is the debtor’s income between $75,000 and $100,000? (True or False) Is the debtor’s income greater than $100,000? (True or False) Is the debtor’s employer a related party? (True or False) Total score (accept if > = 5) Category C – Business Answer PPB rating Does the debtor currently operate a business? (True or False) What is the nature of the business? (Sole trader = True otherwise False) Are you are aware of whether the business has unencumbered debtors or plant and equipment? (True or False) Total score (accept if > = 5)
  • 25. Category D – Other assets / matters Answer PPB rating Are there any other assets with a value greater than $10,000? (True or False) Is the debtor a vexacious / litigious person? (True or False) Is the debtor self represented? (True or False) Number of companies the debtor holds shareholdings? Total score (accept if > = 5) Total Score ( Accept Appointment if any Category is >= 5) Answer PPB rating Total rating - CAT A Total rating - CAT B Total rating - CAT C Total rating - CAT D Is consent granted? Contacts Scott Pascoe Andrew Scott Simon Theobold Partner Senior Manager Partner t: +61 2 8116 3202 t: +61 2 8116 3063 t: +61 8 9382 8933 e: spascoe@ppbadvisory.com e: ascott@ppbadvisory.com e: stheobold@ppbadvisory.com Geoff Granger Warren White Peter Macks Director Partner Partner t: +61 2 8116 3224 t: +61 3 9269 4225 t: +61 8 8211 7800 e: ggranger@ppbadvisory.com e: wwhite@ppbadvisory.com e: pmacks@ppbsa.com.au Mark Roufeil David Leigh Director Partner t: +61 2 8116 3000 t: +61 7 3222 6800 e: mroufeil@ppbadvisory.com e: dleigh@ppbadvisory.com www.ppbadvisory.com Important: This information is not advice. Readers should not act solely on the basis of information contained in this document. We recommend that formal or independent advice be sought before acting in the areas covered herein. 00075STAT. April 2011.