Malaysian Airlines and Bankruptcy.
By Charles Bosse
The future of Malaysian Airlines is unclear after another very public and devastating tragedy struck the airline last week when flight MH17, was shot down over eastern Ukraine last week. The airline was already struggling prior to Flight MH370 disappeared back in March. The company is in talks with a number of different parties including the unions to try and prevent bankruptcy. That combined with ticket refunds and reduced ticket pricing to try and stay solvent are some of the strategies that the airline is doing to pay its bills, its difficult to be optimistic for the airlines future, it needs a serious equity injection if it is going to survive.
Every business large or small can have set-backs and things that go horribly wrong, as the business environment is already very competitive it doesn’t take much to have the numbers go south. In a heart beat a business owner can find themselves running a business that has once been quite profitable to just viable and then very quickly insolvent. Knowing what to do when that happens for most business owners is not easy. Getting the right advice is the key here.
Generally if you are running a business and you find yourself just working for your suppliers or just to pay your staff and you are slowly going backwards the hardest thing to do is STOP! The best advice I could give anyone that finds themselves in this position is this; “The sooner you can stop this slide down the road to insolvency the more options you will have” If you let things get too bad you won’t have any options at all, a creditor or the ATO will take action against you and then you will be forced into bankruptcy or liquidation on someone else’s time frame. The last thing you want is to let someone shut you down, a voluntary bankruptcy or liquidation is a very different experience to being forced down that path by a creditor.
If you are trying to decide what to do with all your debts whether they are personal or through your business or if your are thinking may you should go bankrupt or just liquidate your company give us a call on 1300 818 575, and we will help you through the process with a no obligation free consultation.
21st July 2014
AUSTRALIAN motorsport legend Dick Johnson has revealed he is broke and unwell after losing a staggering $9.1 million.
A sporting great who should be living in the lap of luxury after a 36-year career, the five-time V8 Touring Car champion is living off $350 a week and hasn’t drawn a wage from his famous race team Dick Johnson Racing since 2008.
The 68-year-old also spoke for the first time about his ailing health. “I lost nearly everything I owned,” Johnson told The Sunday Telegraph last week.
“My house, my factory, my health and my famous cars. Even my dignity. I was conned out of $9.1 million.”
Failed business deals forced him to mortgage his $2.1 million Gold Coast property in 2008 and a $1.3 million factory that housed the most successful team in the history of V8 Supercars.
The three-time Bathurst winner lost $4 million in savings and was forced to sell the priceless race cars that helped to make him one of the most standout drivers in Australian history.
“They had to go,” Johnson said. “I was broke and busted and left without a choice. It hurt then and it still hurts now. I am sure all this drama will eventually kill me.
“It may floor you to know I haven’t drawn a wage from my business since 2008. Some people think I am a rich racing legend worth a fortune. But my wife and I have been living on less than $1500 a month. That covers food, bills and petrol. Sometimes I have enough to fly my wife (Jill) to races to watch our son Steve race. My only income comes from the factory space I rent to my team. I have nothing else. I lost it all in a dodgy deal.”
Johnson’s woes began in 2005 when his major sponsor, Westpoint, collapsed – leaving him without a promised $12 million for his team.
The man who became a household name in 1980 when he was wiped out by a rock at Bathurst formed two businesses – V8 Telecoms and FirstRock Mortgage Centre. Both companies collapsed in 2007, forcing Johnson to sell his assets to pay out creditors and save his race team.
“I have had many lows in my life, but none more so than walking into a hotel to plead with a bunch of knockabouts to take all I had to give to save my team.
“It was damn right embarrassing and completely terrifying. Thankfully they accepted my deal and allowed my team to survive,” he said, adding the ordeal had made him an “old man” beyond his years.
“I am not a healthy man, the reasons stem from that period of my life – I couldn’t sleep, I couldn’t eat and I constantly felt sick in the guts. From that day I have constantly battled problems that have made me an old man.
“I was never a big drinker but I turned to the bottle to help me sleep and forget my troubles at night.”
I am 68 now and I look old beyond my years. I am not a healthy man, the reasons for which mostly stem back to that traumatic period of my life.
Since starting those companies, I couldn’t sleep, let alone eat. I constantly felt sick in the guts. I never believed in stress; I thought it was a myth. But from that day I have battled through pulsating problems that have made me older than I seem. It’s hard to truly understand stress until you’ve experienced it. Stomach tied in knots, it’s completely draining and all consuming. I’ve been dealing with this feeling for years now and it never seems to go away. I was never a big drinker, but around that time I turned to the bottle to help me sleep and forget my troubles at night.
I suppose I haven’t been well since 1990, all those years of driving also taking its toll. I have had nine operations for sinus-related problems, which in the last ten years of my career got so bad that a piece of cloth rag was sewn into my race gloves so I could wipe away the muck pouring from my eyes. At times I couldn’t see. I’d burst an eardrum almost every time I’m in the air flying to races, muck flowing everywhere at its worst. The sinus also gave me crippling headaches to the point where sometimes I had to lie down in the truck, buried in complete darkness before I jumped behind the wheel. I was in utter agony, but it never once stopped me from racing.
I am now paying heavily for those accidents and countless laps in my motor racing career. I have a titanium knee and a titanium hip. I have been in and out of hospital for years, dealing with infections and surgeons having to go back in to clean them up. I have been told not to travel, and I shuffle instead of walk. But still, I haven’t missed a race.
To this day, I walk with my fists up, readying myself for blows. Every day is a challenge, but I am up for the fight. I know I have aged, I know I’m not well, but I’m determined to continue despite all that’s affecting me. My family has kept me strong throughout my trials and tribulations, especially during that traumatic time of my life when everything seemed to have been taken away from me. But amid this hellish period a little bundle of bliss arrived, making me realise what life was all about.
My grandson Jett was born in March 2005. He is arguably the best thing that has ever happened to me. I was in the deepest shit, feeling completely desperate, and when he came along he made that all go away. I’d sit with him in my arms, and Jett would make me forget about everything else, and I was alive again.
Family is the one thing that has been constant in my life, and young Jett gave me the will to fight on. He is my inspiration, as are Jillie, Steve, Kel, Lacy and my brothers and my sisters. As was Jillie’s mum and her dad; my parents too. And, of course, all my mates and lifelong friends.
I also made a quiet promise to myself, one I hope I’ll be able to keep. As I walked out of Fitzy’s Hotel, I vowed to pay back all those poor people who had lost their money in the failed company. We’re not talking millions, and under law I’m not obligated to do anything. But that’s not my style. I can’t sleep knowing that I caused problems for these people, and if I get back on my feet I will give them every cent back. I dream of the day I will be able to call them into a room and put the money down on the table and apologise. I would love to show them just how much their support meant to me and that I am indeed genuinely sorry.
There’s still a long way to go. But where there is life, there is hope.
James Phelps – 17th July 2013 – Extracted from Dicks Autobiography.
Story by: James Phelps Courtesy of the Sunday Telegraph 20th July 2013
Australians Filing for Debt Agreements Reaches Record Numbers
With the rising cost of living making more of an impact on peoples spending, it’s no surprise that in the 2012 – 2013 financial year, a record amount of Australians filed for debt agreements. New South Wales had the highest figures with 3235 people entering into a debt agreement. Queensland followed closely behind with the tally sitting at 2706. The Northern Territory had the lowest numbers, although their bankruptcy figures were up by a staggering 82 percent from the previous year.
Overall bankruptcy figures have dropped across Australia, due to the number of people opting to enter into debt agreements in a bid to avoid going down the bankruptcy path.
Ultimately both options have many of the same consequences. Your credit rating will still be damaged for 7 years, and the details of the debt agreement stay on the national record. The increase in people opting in for debt agreements can be attributed to the increase in marketing campaigns of the companies that make enormous profits from them. The difference between the two options is minimal except with a debt agreement you still have to pay back the entire debt, whereas bankruptcy wipes the debt and takes the pressure of the individual to pay back the debts.
Out of all the cases of people entering into debt agreements in the last financial year, the majority of people under 25 struggled with an excessive use of credit; while older people found problems with unemployment and economic conditions.
With such an uncertain economic future ahead, it would be a good idea for everyone to do a little bit of research or ideally, speak to a qualified financial agent who can provide the most up to date information and explain all of the options available to you.
Single Men Biggest Bankrupt Risk
SINGLE men in their 40s are at the highest risk of going bankrupt, according to a new report.
The Insolvency and Trustee Service Australia (ITSA) report says the most common age for declaring insolvency is 40 to 44 years, with the majority of declarations by single men.
“The age of bankrupts has consistently increased since 2003, with the proportion of bankrupts aged 18 to 39 declining and those aged 40 and over increasing,” the report said.
Released every two years, it said there were 23,125 bankrupts in 2011, of whom 57 per cent were men, with 40 per cent of those single and 29 per cent in their 40s.
The main drivers of personal bankruptcy were loss of work or income or excessive use of credit facilities, while business-related bankruptcies were mostly down to economic conditions.
Around 48 per cent of bankrupts earned more than $30,000, and 80 per cent of personal insolvency debtors earned at least that amount.
The report said 27 per cent of bankrupts owed at least $100,000, while 69 per cent of personal insolvency debtors owed at least that amount.
Banks were owed the biggest share of unsecured debt – 41 per cent in the case of bankrupts, 58 per cent for debt agreement debtors and 25 per cent for personal insolvency debtors.
Credit cards accounted for 21 per cent of bankrupts’ unsecured debt, 18 per cent of personal insolvency agreement debt and a record 58 per cent of debt agreement debt.
A debt agreement assists debtors with unmanageable debt, while an insolvency agreement is a flexible way for a debtor to come to an agreement with creditors without going bankrupt.
The most common age for debt agreement debtors is 25 to 29 years.
Bankruptcies in Australia increased to 941 Companies in April of 2013 from 918 Companies in March of 2013. Bankruptcies in Australia is reported by the Australian Securities & Inv. Commission. Australia Bankruptcies averaged 643.04 Companies from 1999 until 2013, reaching an all time high of 1123.00 Companies in February of 2012 and a record low of 217.00 Companies in January of 1999. In Australia, bankruptcies account for insolvent corporations who cannot repay their debts to creditors and carry on with their business. This page includes a chart with historical data for Australia Bankruptcies.
Bankrupted and down – but still full of fight.
RICHARD Mulhern has gone from heading a property business with 250 staff in Queensland to getting arrested at an airport and being declared bankrupt with debts allegedly exceeding $60 million.
The 52-year-old has spent nights in a Brisbane police watchhouse, been accused of stonewalling his bankruptcy trustee and had his passport seized, preventing him from attending his father’s funeral in Ireland.
But Mr Mulhern argues he and his family are the ones who have been wronged. The fight will continue in court, he pledged, despite several losses already.
“We will do it because it’s just,” he told The Courier-Mail in his strong Irish lilt.
He was dressed simply for a businessman, in a baseball jacket. But he was suspicious – at one stage asking if this reporter was working on this story on behalf of “subversive groups” interested in robbing people.
Legal actions, he asserted another time, had been taken out against the Mulhern Group to “oppress you – scare the hell out of you”.
He was speaking at Queensland’s Supreme Court, the site of one long-running legal saga entangling the Mulhern Group.
Mr Mulhern and family settled in Australia in 1994, growing a business whose assets included a shopping centre in Gladstone and the Dicey Reilly Irish-themed pubs. The Mulhern Group was a top client of Bank of Queensland, borrowing almost $57 million. That relationship remained even as the Mulherns moved to New York in 2007.
But as The Courier-Mail revealed last year, the relationship soured soon after.
“Mr Mulhern (has) attributed malice and misconduct to the Bank of Queensland,” one Federal Court judgment noted.
It referred to Mr Mulhern alleging that “horrific events (were) orchestrated” by BoQ “and its agents”.
There were disputed allegations detailed in a Supreme Court fight of excessive fees charged on loans, conspiracies and a lack of disclosure.
The allegations were denied by BoQ, according to court documents. Court filings indicated BoQ had its own allegations, which the Mulhern Group challenged, such as that Mulhern-related companies had breached loan-valuation ratios and defaults. (BoQ declined to comment for this article.)
By 2010, the bank had appointed receivers. Again Mr Mulhern, who personally guaranteed company debts, protested against the action.
In the same year, he was bankrupted following a dispute with a former business partner. Things have worsened since.
A warrant was issued for his arrest in August last year after he allegedly failed to co-operate with bankruptcy trustees Mark Pearce and Andrew Heers.
One Federal Court judgment noted an allegation had been made that Mr Mulhern used the alias “Derek O’Malley”.
“I do not have alias names,” Mr Mulhern retorted to The Courier-Mail.
The trustees, according to a letter detailed in a judgment, complained Mr Mulhern had left Australia twice in 2011 without seeking consent.
“What obligation have I got to seek his permission if (the trustee is) invalidly appointed?” Mr Mulhern argued.
Mr Mulhern’s international travel stopped early on Sunday morning on January 8 this year, when he was arrested coming into Sydney airport.
After getting bail he was later rearrested and handcuffed, Mr Mulhern said. Then he was flown to Brisbane “with two Federal Police officers beside me”.
He told of being stripped at Roma Street watchhouse.
“I felt I was having a heart attack,” he said, and he was treated at Royal Brisbane Hospital before returning to the watchhouse for five nights.
He was released after appearing at a bankruptcy examination, but his passports were confiscated and during this time, his father died in Ireland at the age of 83.
Mr Mulhern tried to get his passport back, offering several reasons in court. These included the fact that he had voluntarily returned to Australia three times and he had a “good incentive” to come back: dealing with the dispute with BoQ.
Justice Jayne Jagot wrote that she accepted Mr Mulhern had a genuine reason for wanting to travel to the funeral, but incidents had “led to a strong inference that Mr Mulhern is a serious flight risk”.
She also cited a “lengthy series of delays and other avoidance by Mr Mulhern of his obligations” in the bankruptcy.
It was “heartbreaking and extremely sad that I couldn’t be at my father’s funeral”, Mr Mulhern said.
Among 10 problems the trustees complained of, in a letter outlined in an April judgment, was that Mr Mulhern had failed to “properly answer questions” related to his bankruptcy. That letter also accused him of refusing to provide documentation about assets he allegedly owned, including a $1 million New York apartment and two other US properties worth $7.5 million.
“It’s nobody’s business,” was his response when The Courier-Mail asked him how he was doing financially these days.
But Mr Mulhern asserted he had lost a $US350 million ($340 million) contract on the World Trade Centre revamp because of being prevented from leaving Australia.
As for not co-operating with his bankruptcy trustees, Mr Mulhern offered a simple logic: “Have they been validly appointed? No. What obligation do I have to co-operate?”
But one trustee, Mr Pearce, told The Courier-Mail his appointment was valid. There has been no significant change in terms of seeking compliance from Mr Mulhern under his bankruptcy obligations, Mr Pearce said.
Mr Mulhern has tried to get his bankruptcy annulled, complaining he should never have been declared bust in the first place, according to one judgment. His argument was based on jurisdictional issues affecting bankruptcy, including whether he lived in or had a business in Australia.
“The substantive hearing of Mr Mulhern’s application for an annulment was dismissed,” the judgment said.
Mr Mulhern has lodged an appeal in the Federal Court attempting to get his passport and annul the bankruptcy.
In the documents, he displayed a dramatic flair. He insisted on being specifically identified in the court file as “The Australian-made bankrupt”.
Mr Mulhern maintained he has acted ethically all his life. He never even knew of an arrest warrant in the first place, he said.
“Why would an arrest warrant be issued for me?” he asked. “What did I do ever wrong?”
1994 Moves to Australia
1994-2007 Creates property and pub operation with 250 staff
2007 Moves to US
2010 Declared bankrupt, disputes with bank result in companies’ receivership
2012 Ongoing legal disputes
by: Liam Walsh
July 11, 2012
Dick Smith knows why Darrell Lea failed
Administrators are only two days into probing the reasons for the sudden shock collapse of confectioner Darrell Lea.
But they don’t need to probe too deep – they only need to ask recidivist anti-supermarket campaigner Dick Smith because he knows exactly why Darrell Lea failed: It was Coles and Woolworths, fault he told AAP on Wednesday.
Ignoring the fact that the majority of Darrell Lea’s production was sold in its own or franchised retail stores and non-grocery outlets, both in Australia and abroad, Smith has laid the blame fairly and squarely on the so-called grocery duopoly’s ongoing practise of screwing suppliers on price.
And Smith told AAP a foreign buyer will swoop on the 85 year old Australian family-owned confectioner which went into voluntary administration on Tuesday.
He says a new owner won’t be able to obtain a distribution contract with the major supermarket players.
“Maybe someone can take them over (Darrell Lea) and sack a lot of workers and run the company,” Smith said. “The most likely thing is it will get taken over by someone overseas.”
Smith, after making a fortune retailing cheap electronics imported from China and Taiwan, had an overnight epiphany the day after he sold out to Woolworths became a fervent patriot of Australian business. He frequently attacks the grocery duopoly for deranging Australian-made products, but has failed to make a success of his alternative Dick Smith Foods brand which sources products only from local suppliers.
Smith told AAP on Wednesday that big Australian businesses were “obsessed with growth and squeezing out smaller competitors” and Darrell Lea’s woes could happen to any medium-sized business.
“Either you get taken over or you go broke, and in the case of Darrell Lea the reason they’ve got problems is that basically the big supermarkets have taken most of their business,” he said.
“In the old days they weren’t really selling those Darrell Lea-type products, now you can go into Coles and Woollies and they’ve got them all there.”
Smith ruled himself out as a white knight and nominated billionaire mining magnate Clive Palmer as a suitable rescuer.
“I wouldn’t be able to compete with Coles and Woolworths importing from China,” Smith said. “I’m working flat out on Dick Smith Foods… to get that viable again.”
Voluntary administrator Mark Robinson, of PPB Advisory, is leading a review of Darrell Lea’s accounts to help understand the extent of its financial problems.
Robinson was unable to confirm claims by the Australian Manufacturers Workers Union that seven international and local buyers were eyeing Darrell Lea
By Robert Stockdill Posted 11th July 2012
Super Butcher business destiny likely to emerge soon
By Jon Condon 05 Jun 2012
Creditors of the financially-stressed Super Butcher warehouse retailing business should learn more about the company’s future following a creditors’ meeting scheduled from 10am today in Brisbane.
Administrator Glenn Shannon from PA Lucas has called a meeting of creditors this morning to inform them of recent developments.
An outcome was originally anticipated among creditors after a court hearing on May 29, but a series of delays have since slowed the process.
The business, fronted by Andrew McDonald, former owner of the South Burnett meatworks, went into administration on April 30 after teetering on the brink of collapse and being threatened with liquidation, owing $6 million to a long list of creditors and the tax department. Most are prominent red meat wholesalers.
The largest of the creditors, Auswide, says it is owed more than $1.2 million, and there are several others owed $800,000 or more.
Super Butcher is regarded as one of the largest independent meat retailers in Australia. One week’s trade recently under the control of the administrator recorded turnover of $900,000.
Should the Super Butcher business ultimately go into liquidation, however, it could well be fatal for several of the smaller, less financially robust creditors caught up in the crisis, stakeholders say.
Auswide principal, Gary Stone, has put together a package to try to stop the business going into bankruptcy. However it appears at least one other camp is also mounting a bid to buy the business.
The administrator has provided details to creditors of a second offer received from Bindaree Beef Pty Ltd, controlled by members of the McDonald family, and PrimeAg Meats Pty Ltd, one of the unsecured creditors. PrimeAg’s website describes the company as “a family owned and run farm producing premium grassfed beef and lamb in the pristine country sides of Northern NSW.”
It makes no attempt to disclose who the family owners are.
Super Butcher founder Andrew McDonald is understood to be appealing for an extension to the administration stage of the process by up to four weeks, so he can seek an alternative buyer.
A notice to creditors recently identified debts totalling more than $6 million to unsecured creditors. Among the well-known industry wholesalers and other businesses owed large six-figure sums of money are Australian Wholesale Meats (Sydney), Ambrosia Commodities, Auswide Meat Wholesalers, Bangalow Pork, DR Johnston, Centa Waterford, Glencoe Meats, John Harris Meats, MDH Pty Ltd, Newland Food Co, PrimeAg Meats and Sanger Australia.
References are also made in the latest administrator’s report to the possibility of insolvent trading and shadow directorships.
A number of possible recovery actions are tabled for discussion at today’s creditors’ meeting.