As all credit professionals know - credit, cashflow and collections all work together to protect the lifeblood of many businesses.  Without a proper functioning credit team, businesses run the risk of significant impacts on ongoing profitability and viability. 

Unfortunately, risk is an unavoidable part of the credit function. 

With this in mind, this article from Commercial Recovery and Insolvency Partner Chris Hadley and Special Counsel Andrew Tanna highlights how carefully considered credit terms can help to mitigate risk and provide safeguards to your business.

This piece was originally published in the Australian Institute of Credit Management's 2022 Risk Report published 30 May 2022).

The pandemic has significantly impacted the way in which a trade creditor will interact with its customers, particularly when it comes to demanding payment from them. In many cases, a credit officer will do his or her job well by working with those customers who have been experiencing financial difficulty and collecting payment, including by way of instalments over time.

Conversely, up until recently, the ATO’s collection activity has been almost non-existent since the pandemic began in 2020. Around early April 2022, the ATO wrote to over 50,000 directors giving them 21 days’ notice to pay their tax liabilities, failing which a Director Penalty Notices may be issued.

This has been seen as a ‘warning letter’ on the part of the ATO.

Two recent Full Court of the Federal Court decisions have impacted the way in which preference claims are conducted referable to the application of the ‘peak indebtedness rule’, and the application of set-off under s. 553C of the Corporations Act 2001.

​Holman Webb is pleased to announce six promotions across our Sydney, Melbourne and Brisbane offices – effective 1 July 2021.

Holman Webb Lawyers is proud to relay that the firm has been listed as a finalist in two categories in the Lawyers Weekly Australian Law Awards 2021:

• Law Firm of the Year
• Insurance Team of the Year

Click through for more information on this year's finalists, and upcoming winner announcements.

The Full Court of the Federal Court recently delivered its judgment in the matter of Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64.

The decision will undoubtedly have significant implications for the ongoing application of the peak indebtedness rule by creditors and liquidators.  

Revenge of the Zombies is a 1943 horror film in which zombies exact revenge on their mad scientist creator.

Although there are not many mad scientists on the scene in 2020, there are many zombie companies which, if subject to liquidation, are likely to create an influx of preference claims being brought by liquidators and which will cause grief to credit managers in the coming months and years.

In March 2020, the New South Wales Government enacted the COVID-19 Legislation Amendment (Emergency Measures) Act 2020 to prepare New South Wales for the impacts of COVID-19 in line with health advice, and to take immediate steps to address existing barriers in our laws that were incompatible with social distancing policies.  This included amending the Electronic Transactions Act 2000 ('the Act') to create a regulation-making power that would allow for regulations to provide for alternative mechanisms for signing and witnessing documents.

Pursuant to these powers, the New South Wales Attorney-General introduced the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020, which allows for documents to be signed by one person in one place, and witnessed by another person in another place using facilities such as Microsoft Teams, Zoom or FaceTime.

From 1 January 2021 new insolvency regimes will be introduced which will involve:

1. a new insolvency process for small businesses whereby financially distressed but viable companies can restructure their existing debts and continue to trade; and
2. a simplified liquidation process which will allow for faster and lower-cost liquidation.

In Episode 10 of Legal Lockdown, Adriana Giometti speaks with Chris Hadley, Partner within Holman Webb's Commercial Recovery and Insolvency Group, to discuss a range of COVID-19-related changes brought about in the debt recovery space.

Topics include:

• Has there been a surge in insolvencies and bankruptcies?
• What can we expect to see moving forward?
• Government relief measures
• Changes to statutory demands
• Director's liability in light of the changes