Banks have become far more active in taking possession of assets. The number of insolvency appointments initiated by secured creditors has more than doubled from 6 per cent of the national total in 2007 to 14 per cent in 2011.

Queensland’s proportion of the national total insolvencies has increased from 14 per cent in 2006 to 20 per cent in 2011.

WA’s proportion has increased from 4 per cent in 2007 to 7 per cent in 2011.

Dishonest financial advisers are shutting down one business and opening up a new one in an attempt to avoid defending or paying out compensation to clients who were given bad advice.

“Rogue financial operators who gave negligent advice to their clients are able to re-establish their business and continue to practice,” Briohny Coglin, a lawyer with national legal firm Maurice Blackburn said yesterday.

“In one particular case, several clients sought compensation due to negligent financial advice but the firm claimed insolvency. The same firm re-established their business under another name and continued offering financial advice.”

Adding to the problem and practice was that many financial advisers lack sufficient professional indemnity insurance to cover claims.

In one case last year a company argued it had a yearly compensation limit of $2 million and it had almost run out.

In other cases, even if the firm or adviser has enough insurance cover, their policies often exclude claims involving fraud, material non-disclosure or insolvency.

Consumer Action Law Centre chief executive Carolyn Bond said consumers were being left high and dry.

“We are aware of this problem with some advisers, particularly when they have given poor advice and their business is going into liquidation,” Ms Bond said.

“They can have all these people claiming because they’ve received very poor advice and lost money and unfortunately they are not able to get their money back because the company shuts down,” she said.

Consumer campaigner CHOICE spokesman Christopher Zinn said changes to financial advice laws should help shut down the problem of phoenix companies.

“It’s a problem, like it’s been a problem in other areas, but we certainly think that proposed government reforms will help,” he said.

The so-called Future of Financial Advice reforms being finalised by the government would make it easier for the investment watchdog “to deal with the bad apples”, Mr Zinn said.

Assistant Treasurer and Financial Services Minister Bill Shorten said yesterday new laws should help wipe out the problem.

“One of our concerns is so-called phoenix financial businesses. Companies that lose their client’s money often don’t have enough professional indemnity insurance, declare bankruptcy to escape their debts and then we see the directors starting up new businesses a couple of months later,” he said.

“I should stress that I don’t believe this is a big problem within the industry, the vast majority of financial planners are honest and competent, but it is an issue we are looking at,” Mr Shorten said.

News.com article excerpts

They have held on through rising rents, digital competition online, a strong dollar and the lingering effects of the global financial crisis, which have tightened credit and driven their customers away.

While confessing it’s still an “uphill battle”, they can count themselves as the lucky ones in a neighbourhood where “for lease” signs litter the local shopping strips.

“Retail is changing and it is getting harder and harder to survive,” Mr Fergusson told news.com.au. “Retail has definitely been flat since the GFC but the last 12 months have been extremely bad.

“Consumers have changed their spending habits and have become very careful with their money.”

The family business is in Bronwyn Bishop’s Mackellar electorate where 359 others all shut up shop between 2007 and 2010.

It’s a bleak snapshot of a nation where more than 30,000 small businesses have folded in the period, taking with them up to 126,000 jobs and leaving the survivors – especially those in retail – desperately treading water.

Mr Fergusson said neighbouring shops that had been there for decades like Next Chapter Books and Treasure Island Toys – had recently closed.

He said the trend was for smaller players in shopping centres to be replaced – if at all – with national chain stores as they close. The flow-on hits landlords who are no longer able to charge as much rent with so many vacancies.

“This is where the landlords will need to change their stance,” he said. “Because the national chains will simply refuse to pay the higher rents.”

Mr Fergusson’s shop is the only remaining independent CD store in the area and he said his future remained uncertain.

On the other side of Sydney, more than 120km away in the Blue Mountains, it’s a similar story for books and antiques dealer Guy Weller.

Mr Weller owns the Mr Pickwick’s store in Katoomba and says business has been hit hard – particularly on the antiques side.

“Anything that veers into the territory of discretionary spending has taken a hammering,” he said.

“The street’s half empty. There are shops up for lease everywhere. And others have cut down on their opening hours and cut down on staff.

“Anyone who’s managing to hold the numbers they were doing two years ago generally congratulates themselves and is congratulated by me as doing pretty well.

“I don’t know of anybody saying they’re surging ahead.”

Mr Weller said the GFC was “a very strong contributor” to the downturn, along with internet competition and a drop in visitors to the picturesque tourist spot – largely driven away by the strong Australian dollar.

Two years ago he says most sales at Mr Pickwick’s were paid for on a credit card. That has since dried up, something Mr Weller says is indicative of a more cautious customer.

To survive, he has taken his business online, helping to broaden his customer base and stem the losses.

“That’s really been what’s helped get us through this period actually,” he said.

Only this week, we spoke with a butcher about the liquidation of his company caused by a collapse of his usual sales by approximately 45%. The butcher complained the spending habits of people was such that they were concerned about spending and were now choosing cheaper cuts of meat or even doing without.

If you are having financial issues, you can speak to the Insolvency Experts 24 hours a day, free of charge and totally confidential. Call 1300 100 285 for advice concerning your situation.

news.com.au article excerpts

As emails go, it was a cracker. And with thousands of tax refunds still being processed, surely it was true?

“After calculations of your fiscal activity we have determined that you are eligible to receive a tax refund. See your refund status by downloading attachment.”

Clicking on the attachment, the reader was taken to a website closely resembling that of the Australian Taxation Office.

They just had to fill in a few personal details, and all would be fine.

But a Perth real estate agent found out recently, almost to her cost, that some things are too good to be true.

“I thought it was strange, we’ve got an accountant and never had anything like that before,” she said.

“I was thinking in the back of my mind, it’s a bit different from normal. But it was very realistic and another of the girls in the office also got the same email.”

Right she was. Thankfully the fraud section of her bank was on the alert and called to tell her there had been suspicious activity on her account.

“Someone was using it to try and do some gambling on a UK website,” the victim said.

The transaction – for “not a huge amount” – was cancelled.

The victim was mystified as to how the scammers got her credit card details – they were caught when asked to enter the three-digit security code on the back of the card – given that she had “only” given them her bank details.

The link she was sent actually redirects the user to a Spanish website with an extremely strong likeness to the official ATO site.

It is the latest in a string of hoax emails claiming to be from the ATO.

A Tax Office spokesman said refunds were unable to be processed online and the ATO would never ask for details such as a Tax File Number, date of birth, passwords, or credit card details.

Anyone who has given out their TFN to a scam site should contact the ATO, as the information could lead to a wide variety of identity thefts, the spokesman said.

If you are unsure whether an email is legitimate, you can check the ATO website www.ato.gov.au/onlinesecurity for examples of SMS and email activities, or call on 13 28 61.

The alleged offences relate to his conduct whilst he was the liquidator of HR Cook Investments Pty Ltd (HR Cook Investments) (in liquidation) between 9 June 2006 to 29 March 2009.

Mr Ariff has been charged with thirteen counts under section 176A of the NSW Crimes Act concerning his alleged transfer of funds totalling $1.18 million with intent to defraud HR Cook Investments.

Mr Ariff has also been charged with six counts under section 1308(2) of the Corporations Act 2001 alleging he made false statements in documents lodged with ASIC recording receipts and payments relating to HR Cook Investments.

The NSW Crimes Act charges each carry a maximum penalty of 10 years imprisonment. The Corporations Act 2001 charges each carry a maximum fine of $22,000 or imprisonment for five years or both.

Mr Ariff has been released on conditional bail.

The matter is being prosecuted by the Commonwealth Director of Public Prosecutions.

This matter has been remitted for mention at the Downing Centre Local Court on 7 September 2010.

Such companies can be resurrected under Section 482 of the Corporations Act but it is an expensive exercise. Usually, that means not only paying the legal costs of the application to the Courts and the liquidator’s fees but all current liabilities of the company. The Courts will only reinstate a company if it is solvent.

Sometimes the creditor who has put the company into liquidation has a claim against the company which would otherwise be disputed. Nevertheless, in order to get the company back, the company must pay out the disputed debt and then, if the company wishes to, the company has to chase the recovery of that debt once the company is back out of liquidation.

However, in SNL Group Pty Limited (in Liquidation) (SNL), a case ran earlier this month by Peter Harkin of Colin Biggers and Paisley, the Court was asked to both to reinstate SNL and not to force it to pay the asserted debt allegedly owed to the petitioning creditor (CMA).

On the petitioning creditor’s claim, CMA asserted that it was owed a not inconsiderable sum in respect of a consignment of iron ore shipped to Singapore in 2008.

SNL, on the other hand, asserted that the grade of iron ore within the shipment was well below that which was required in the contract (there are in fact proceedings on foot in Singapore to deal with that issue).

SNL made an application in those circumstances that, pending the outcome of the Singapore proceedings, the funds claimed by CMA be paid into Court in Australia.

CMA is a publicly listed entity and as a consequence there are a number of reports at ASX going to CMA’s financial position. This information was put before the Court and suffice it to say that the judge was convinced that there were both serious issues to be tried in relation to the dispute between SNL and CMA and that on the current information as to CMA’s financial position it was better for the monies to be paid into Court.

The outcome means that SNL succeeded in getting their company out of liquidation and in retaining a very good chance of avoiding having to pay CMA any money at all if they are successful in the Singapore proceedings.

A link to the decision is set out below.

http://www.lawlink.nsw.gov.au/scjudgments/2010nswsc.nsf/6ccf7431c546464bca2570e6001a45d2/637e6d878b377526ca257765000c07cc?OpenDocument

According to a study, bankruptcies have risen by more than a third in the past four years.

The report shatters the commonly held belief that most people who file for bankruptcy are either chronically poor with no other options or the hugely wealthy avoiding debt obligations.

The report from the University of Melbourne Centre for Corporate Law and Securities Regulation says Bankruptcy is increasingly becoming a ”middle class phenomenon” in Australia.

The report said the number of personal bankruptcy filings jumped by 6 per cent in 2008-09, after rising steadily over the past four years.

There were 27,520 in 2008-09, an increase of 34 per cent since 2004-05, when there were 20,501 cases of bankruptcy. In 2009 the number of personal insolvency cases (which mainly involves bankruptcy but includes debt agreements) shot up to 36,487.

An earlier study found that since 1990 there had been a 300 per cent increase in the number of personal insolvencies in Australia, far exceeding population growth and indicating a strong middle-class presence.

One of the biggest findings was that more and more of the middle class are being claimed by bankruptcy.

The report says that a major cause of rises in bankruptcy among the middle class has been due to unsustainable home loans and excessive use of credit.

Liquidation Direct are experts in assisting people facing bankruptcy.

Call The Insolvency Experts at CRS Warner Kugel, owners of LD.

Call for free, impartial, anonymous advice – 24 hours a day everyday on

Free insolvency advice – 1300 100 285

SMH article excerpts

If the ATO issues a Director Penalty Notice (“DPN”) – they send it to your home address as per the ASIC register.

If you don’t get it because it went to a previous address – that is no defence to the personal liability and loss of personal assets that the DPN will cause if not acted upon within 14 days from the date of the notice.

The NSW Court of Appeal recently held that a DPN was validly served by the ATO because it was sent by prepaid post to the directors address recorded on ASICs register, notwithstanding that the address was wrong.

The ATO is entitled to rely on the ASIC register and it does not have to go beyond such register to establish the correct address (Robertson v DCT).

Again, a director served with a DPN has fourteen (14) days to take corrective action in order to avoid personal liability. Such action includes

• Paying the debt
• Entering into an installment arrangement to pay the debt
• Appointing a Voluntary Administrator
• Appointing a Liquidator

If you have been served with a DPN you MUST act to avoid personal liability.

The ATO CANNOT issue a DPN once the company has been placed into Liquidation or Voluntary Administration.

Call The Insolvency Experts at Liquidation Direct for FREE confidential advice 24 hours – everday.

Call 1300 100 285 – 24 hours

On 23 November 2009, Mr Banovec was found guilty by a jury of five fraud charges and one perjury charge following a four week trial. On Friday, 19 February 2010, Mr Banovec pleaded guilty to a second count of perjury and one count of destroying documents relevant to an ASIC investigation. Mr Banovec was sentenced on all seven offences.

The sentencing follows an investigation by ASIC into Mr Banovec and companies he controlled, including Capital Securitisation Pty Ltd, ACN 110 802 205 Pty Ltd (formerly Staff Services A Pty Ltd), ACN 094 797 618 Pty Ltd (formerly DC Corporation Australia Pty Ltd) and ACN 110 802 938 Pty Ltd, all now in liquidation.

Mr Banovec was convicted of five fraud charges relating to a series of loans of almost $500,000 made by an investor between November 2004 and June 2005. The jury found that Mr Banovec fraudulently failed to on-lend the funds in accordance with the terms of the loan as was required. Instead of on-lending the money, Mr Banovec used the money to support his business. The jury also found that Mr Banovec made a statement on oath that he knew to be false in an affidavit in a Supreme Court of NSW proceeding.

The second perjury charge arose from the making of another statement by Mr Banovec that he knew to be false. Mr Banovec made the false statement in the witness box of the Supreme Court of NSW in proceedings brought by ASIC for the purpose of safeguarding investors’ funds.

The destruction of documents charge related to Mr Banovec deleting computer files that he knew were relevant to ASIC’s investigation into his conduct.

Mr Banovec’s was remanded in custody on 1 December 2009 after breaching his bail conditions.

As a consequence of Mr Banovec’s conviction he will be disqualified from managing corporations for 5 years from the date he is released from prison.

Mr Goldenberg’s disqualification followed an ASIC investigation into his role in four failed companies, Mortimer Close Pty Ltd (Mortimer Close), Terra Firma Capital Pty Ltd (Terra Firma), Concentric Private Wealth Management Pty Ltd and Concentric Accounting Pty Ltd. These companies were placed into liquidation between 7 October 2008 and 12 March 2009.

Mr Goldenberg was also a director of Concentric Financial Planning Pty Ltd, which is currently in liquidation, and Concentric Wealth Management Pty Ltd (CWM), to which receivers were appointed.

ASIC found that Mr Goldenberg failed to understand the role and duties of a director, or failed to perform adequately his duties as director having regard to:

• the size of deficiencies in the companies at the time of liquidations
• the value of outstanding liabilities including the failure to pay taxation debts
• the lack of proper records
• poor management of the companies by Mr Goldenberg.

Mr Goldenberg has the right to lodge an application with the Administrative Appeals Tribunal for a review of ASIC’s decision.

Background
On 26 September 2008, ASIC suspended the Australian Financial Services (AFS) Licence of CWM following the appointment of a receiver and manager. Mr Goldenberg was CWM’s sole director.

On 12 March 2009, the Federal Court ordered the appointment of a liquidator to Mortimer Close. Mr Goldenberg was Mortimer Close’s sole director.

On 19 May 2009, ASIC permanently banned Mr Goldenberg from providing financial services, and cancelled the AFS licence of CWM. Mr Goldenberg was formerly employed as an authorised representative of CWM.

ASIC’s investigation into Mortimer Close and Mr Goldenberg is continuing.