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cases, including what is still today recognised as the definitive case law in this area, Australian Securities and Investments Commission v Plymin (No1) (2003) 175 FLR 124.
In that matter, the court helpfully provided fourteen (14) indicators that a company is insolvent and a number of those were present in relation to the Company.
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They are as follows:
Indicator Evidence to Consider
Continuing losses The historical trading results of a company establish whether it has been trading profitably over a defined period. This analysis allows a view to be formed about whether any profits generated were sufficient to cover any past losses. Ongoing losses will often erode a company’s remaining working capital.
If a company was loss making, this can be reconciled against forecasts to identify underperforming revenue targets and/or increased expense items. In this matter, Black J recognised “the shortfall in the Company’s bus production against its forecast production, throughout much of the period, appears to have substantially contributed to the monthly losses over the period”
Liquidity ratios below 1 A liquidity ratio provides an analysis of a Company’s Current assets as compared to its current liabilities.
Current assets are future economic benefits that are expected to be converted to cash within twelve months. Current liabilities are obligations that are expected to become due and payable within twelve months. A liquidity ratio of less than one means a company’s liabilities are worth more than its assets and could mean a company is unable to pay its debts as and when they fall due.
In this matter, the Company’s liquidity ratio was below one from at least July 2016 onwards.
Overdue Commonwealth and State taxes When a company is experiencing liquidity issues, it often neglects it taxes. Unfortunately, these statutory bodies are often seen as informal debt arrangements and by delaying payment, a company can fund its other creditors/suppliers who are required as part of its day-to-day trading.
An increasing running balance, debt recovery action and failing to lodge returns/statements suggest distress.
In this matter, the liquidators report identified a large tax liability owed by the Company following an audit that was completed by the Australian Taxation Office, which remained unpaid at the date of the administrator’s appointment – nearly one year later.
Poor relationship with present Bank, including inability to borrow further funds
No access to alternative finance
Inability to raise further equity capital Whether a company could raise funds from the sale of assets/ businesses or by raising capital (equity) to allow it to meet the company’s liabilities as they fall due and payable during the period investigated and subsequent periods.
As part of this analysis, consideration will be given to whether any offer for funding (especially from related parties) was genuine, and they were willing and able to contribute towards the working capitally. Whether the funding would improve the availability of cash to meet liabilities, or if it would merely substitute one form of debt with other short-term debts.
Whilst in this circumstance, there was discussion and ultimately draft financing documents provided to the Company, those funds were not in fact advanced and based on the amount to be advanced ($900,000), it would still be insufficient to meet the liabilities of the Company at the time they were due and payable.
Suppliers placing the company on cash on delivery or otherwise demanding special payments before resuming supply
Creditors unpaid outside trading terms
Special arrangements with selected creditors
Payments to creditors of rounded sums which are not reconcilable to specific invoices
Solicitors’ letters, summons[es], judgments or warrants issued against the company It is important to consider a company’s history in meeting its debt obligations and its relationships with its creditors. If a company has failed to meet the original payment terms it is then necessary to examine the relationship between the company and the creditor, and whether there is a reasonable explanation (such as a dispute).
Common signs include creditors pushed beyond credit terms, an increasing trend of aged creditors and/or an increasing total value of the creditors are indicators that a company is in distress.
If the creditor-company relationship breaks down then creditors may start pressing for payment, taking further recovery, or changing their terms to cash on delivery. A company may prioritise its business-critical suppliers or make part-payments to keep creditors at bay.
In this matter, there were numerous instances where suppliers had placed the Company on stop supply for extended periods and creditors whose debts were increasingly being paid outside of their accepted credit terms.
There was extensive evidence of creditors being paid partially against invoices that had not been paid within normal trading terms.
Issuing of post-dated cheques Cheques forward dated or presented when there is insufficient cash.
Dishonoured cheques The modern version includes direct debits and scheduled internet banking payments failing due to insufficient funds.
Outcome of the proceedings
Based on the facts before him, Black J found that the Company was insolvent within the meaning of s 95A of the Corporations Act for the whole of the relation back period. This solidified the liquidators position surrounding the pursuant of preference payments that were made during that period to the relevant fourteen (14) named defendant creditors within the proceedings.
Not all the noted indicators need to be present to determine the solvency of a company and the judge was careful to note that the individual circumstances of a matter need to be considered when answering the ultimate question as to whether a company can pay its debts when they become due and payable.
*Andrew Blundell Principal, Cathro & Partners GPO Box 3368, Sydney NSW 2001 www.cathropartners.com.au
We recognise those members who achieved membership anniversaries between January and March 2022. Congratulations to these members on achieving such important milestones.
Name Designation State Company Years of Service
Joseph Gauthier MICM SA Retired Henry Sampson LICM VIC Retired Mary Jeffries MICM SA Retired Christine McMahon LICM SA Retired Robert Brissett MICM NSW David Jeffs MICM SA Retired 45 years 45 years 40 years 40 years 30 years 30 years
Peter Adams MICM NSW Adams & Partners Lawyers Clive Croxton MICM QLD Resources and Investment Finance Limited Jason Louis MICM CCE WA BGC (Australia) Pty Ltd
Susan Spehr
MICM SA Polyaire Pty Ltd Robyn MacLean MICM NSW Dux Manufacturing limited Daniel Taylor MICM NSW Credit Collection Services Group Pty Ltd Bridgette Allen MICM VIC Vossloh Cogifer Australia Pty Ltd Murray Ashford MICM CCE QLD Hanson Construction Materials Pty Ltd Katrina De Kaste MICM TAS Tasmanian Collection Service Marie Fellows MICM CCE NSW Transurban Limited Carolann Skerratt MICM CCE QLD Cement Australia Pty Ltd Andrew Williams MICM VIC Qudos Bank Paul Wright MICM VIC BP Australia Pty Ltd John Madsen MICM SA Madsen O’Dea Rabia Porter MICM NSW Instant Access Australia Nadarajah Ramraj MICM NSW Fuji Xerox Australia Pty Ltd Corrine Riley MICM NSW GrainCorp Operations Limited Andrew Ruigrok MICM VIC Brightstar Logistics Pty Ltd Moses Samaha MICM NSW Equifax Belinda Walker MICM VIC Adidas Australia Pty Ltd Shane Woolley MICM VIC RACV Finance Bridgitte Brown MICM QLD Transurban Limited Andrew Castledine MICM NSW Equifax Ian Gale MICM VIC Adecco Australia 25 years 25 years 25 years 25 years 20 years 20 years 15 years 15 years 15 years 15 years 15 years 15 years 15 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years 5 years 5 years 5 years
Beverley Hartsorn MICM VIC Adecco Australia Peter Hazadonis MICM NSW Risk Consultant Julie Herbette MICM VIC Adecco Australia Jennifer Ker MICM VIC 5 years 5 years 5 years 5 years
Margaret Leahy MICM QLD Nutrien Ag Solutions Limited
5 years Yunfei Lei MICM NSW Sydney Markets Credit Service Co-Operative Ltd 5 years Claude Maroun MICM NSW Equifax 5 years Rachel Moher MICM VIC Adecco Australia 5 years Krystle Owen MICM NSW Transurban Limited 5 years Andrew Paton MICM VIC 5 years Sonia Rosenthal MICM NSW Adecco Australia 5 years Nicole Rosenthal MICM QLD Foundation Solutions 5 years Aimy Schembri MICM NSW Transurban Limited 5 years Wes Smith MICM WA Capricorn Society Ltd 5 years Gary Thorley MICM QLD Charter Mercantile Pty Ltd 5 years
2022 National Credit Team of the Year
Recognising credit excellence in 2022
The National Credit Team of the Year Award is an opportunity for credit teams to be recognised for the outstanding work, results, culture and learning they undertake.
Nominating your credit team has many personal and professional benefits including the chance to: l Demonstrate best practices in credit management l Gain team and individual recognition within the credit industry and internally within your company l Develop personal presentation skills l Build team spirit.
Past participants rate this process as one of the most rewarding and fulfilling times in their careers when they take the time to reflect on their team’s achievements.
Applications will open in June 2022, applications close 30 July 2022.
Equifax has been sponsor of Credit Team of the Year since its inception in 2008.
For more information and entry requirements CLICK HERE or phone 1300 560 996 PAST WINNERS
2021: Synergy
2020: Woolworths
2019: AGL
PROUDLY SPONSORED BY
Nathan Schwarz, Lesley King (both Deloitte), Krystal Jones (Homestart) and Neil Fennell (SA Division President).
President’s Report
We have had a good start to 2022! The SA Division has been busy, having already held our annual Fringe event that started at the Stag Hotel with a few drinks and nibbles. We then went across to Rymill Park to watch a follow-up show at Glutony which is one of the main outdoor venues for the Fringe. We watched the highly entertaining Rouge Circus and were in awe of their amazing acrobatic abilities. It was a thoroughly enjoyable evening and Gemma McGrice from NCI did another great job in organising it.
We are pleased to report that in Jan/Feb we have had a good increase in membership numbers. This was largely attributable to Nick Cooper (ex-President AICM) at Oracle Insolvency Services. It’s good to see them return to the AICM. They have been great supporters of the AICM in the past and we look forward to their ongoing participation at events.
In addition, we have been busy planning several other events for the year ahead and we are finalising details for the much-anticipated Economic Breakfast. The last one held at the Lion Hotel was a popular and very informative breakfast and we look to emulate that success again this year.
We have been fortunate enough to secure a guest speaker from Deloitte Economics. As we all know, there is a tremendous amount of speculation and economic uncertainty about the business community in relation to inflation, interest rates, etc. We eagerly await any predictions and forecasts about any future economic activity that Deloittes might be able to offer.
We are also in the process of organising the Risk Management Seminar and the very popular and well attended Women in Credit Luncheon (WINC’s). It’s great that Alice Carter (ex-President AICM) from Lynch Meyer will be involved in these important events – she always does a fantastic job! Alice will be assisted respectively by Briana Harris from Oakbridge Lawyers and Gemma McGrice from NCI. They make a great team, and we look forward to these two important functions.
We also very pleased to announce that Cameron Henderson from Oakbrige Lawyers will be assisting the SA Council with the membership portfolio. He is a former state YCP winner and was a contender for the 2021 National Young Credit Professional of the Year. Prior to joining Oakbridge, Cameron worked for the South Australian Chamber of Commerce and Industry, a leading Adelaide commercial law firm and as a Ministerial adviser to the South Australian Government. He breadth of experience and capabilities will make a valuable contribution to the SA Division.
We have recently held our state elections in SA and Labor won easily. After 16 years of Labor government in SA from 2002-18, the Liberals were defeated after Members and guests preparing to go to the SA Fringe Festival. DIVISION REPORT
a single term. An expected result here in SA and let’s see what implications that will have on the upcoming federal elections in May.
– Neil Fennell MICM SA Division President
Fringe Event 2022
On Thursday, 17 March 2022 the SA Division held an event to celebrate the Southern Hemispheres Largest, and Australia’s biggest, open access arts festival – the Fringe Festival.
From big names in the world of entertainment to unknown artists looking to build their careers, the Fringe caters for everyone and includes theatre, comedy, dance, physical theatre, circus, cabaret, children’s shows, musicals, opera, music, spoken word, exhibitions, and events.
This year, members first had a chance to catchup at The Stag Public House, which was followed by attending Rouge, otherwise known as a “Circus for grown-ups”. Having been awarded Best Circus Adelaide Fringe 2020, and weekly awards for Best Circus at Adelaide Fringe 2018 and FRINGE WORLD 2019, members were dazzled by acrobatics, cabaret, and burlesque performances.
The event provided a much-anticipated chance for members to catch up and celebrate the Festival State’s most decadent event. Members in spotlight
The SA Division is extremely fortunate to have a variety of accomplished credit professionals from a range of different backgrounds, and we are proud to introduce them to the other States.
For this edition of the magazine, we would like to spotlight some of these members, whose dedication to the AICM and service to the profession as a whole is worthy of celebration and recognition.
Rob Naudi MICM
Rob has been a member of the AICM for 27 years and is a Registered Liquidator and Director at Rodgers Reidy.
Rob has the following to say about his professional experience and accomplishments:
Rob Naudi MICM
My first thought was winning a very long court battle over 5 years, but even that doesn’t give the same sense of accomplishment as paying a dividend of 100 cents in the dollar plus interest.
Be involved in the AICM by attending training courses, networking with your peers and if possible, attending the national conferences. The AICM is your resource to develop your career and create relationships with like-minded people.
Having just turned 56, I am tempted to say getting up in the morning. I think it has been the last two years like most people have been a real challenge for most.
As a liquidator and trustee in bankruptcy there has been a sharp decline in new appointments, a position that was not expected by anyone. Managing the numerous aspects associated with little new work flowing in, keeping talented and valued staff employed and happy, and paying the continuing bills creates a situation where you are advising yourself as a client on cash flow management, forecasting, stress point analysis and options to get through the downturn in new work whilst being mindful that the market will turn and being ready to capture that opportunity when it happens.
What has being a member of the AICM done for you?
I originally started in credit management. At the time I moved from auditing, so I had no network of people to discuss issues that faced me. The AICM introduced me to a valued database of like-minded professionals and provided industry specific training on both key issues and developing changes in law.
Being a member gave me the opportunity to give my best in my then career change and also gave me the opportunity to give back as a state committee member. Taking on that role further enhanced my network of contacts in the profession and created relationships that I still maintain and value today.
I have always enjoyed fishing, camping and 4wding. The solitude of these activities is relaxing and a great escape from what can be quite stressful activities associated with insolvency services.
More recently I have acquired a specific rifle for long range shooting. I should note that this activity is with the express permission of my partner who in no uncertain terms has permitted this activity on the condition no animals will be harmed in the process. Paper targets and steel plates at 1,000 metres however are fair game. Lisa Anderson FICM CCE
Lisa is a Credit and Customer Service Manager at Coopers Brewery and has been a member of the AICM for 16 years.
Lisa has the following to say about her experience and involvement with the AICM.
Lisa Anderson FICM CCE
Every day is a new professional accomplishment, everyday regardless of how repetitive it can be there is always something new thrown your way that you must deal with respectfully and professionally. For me it is not just one thing, I am grateful to have the opportunity to take what I have learnt over the years and pass the knowledge onto the next generation coming up the ranks.
Never be afraid to ask questions, always be courteous, listen to your customer both internal and external and be open minded as everyone’s situation is different. Trust your training and believe in yourself. Never take it for granted.
Dealing with the challenges of the Covid era, not everyone can work from home, some jobs need you to be hands on, this creates challenges of making sure you and your team have the necessary resources to get the job done with the high quality of customer service that has been expected, and it is done safely. Knowing that safety for yourself and others is at the top of everyone’s list and that it is the hottest and most sensitive topics in our society today.
What has being a member of the AICM done for you?
Being a member of the AICM has given me a chance to grow within the Credit Industry and learn from mentors who eventually become your peers. Building a great network of like-minded professionals from diverse cultures and business. The AICM allows you to engage, enquire, learn, and contribute to the changes that affect and influence the Credit world.
Like most people who answer this question… friends and family but realistically life and work can get in the way of this too. So, to encourage the friends and family connection, I pull on a Pinny (for those of the younger generation an apron) and bake up a storm of cakes, cupcakes, biscuits, and that odd, unusual recipe I’ve always wanted to try…. And find I will never do it again!
Allison Balkauskas MICM
Allison is a Credit Manager for MSP Group of Companies and has been a member of the AICM since 2004. With a wealth of knowledge and experience, Allison has the following to say about her experience with the AICM.
Allison Balkauskas MICM
After 10 years working in the credit team with the MSP Group, I was promoted to the position of Credit Manager in 2018. I was given the opportunity to oversee the credit management of 16 trading companies leading a team of 5 credit controllers. I regard building and supporting a cohesive, proactive and result driven team as my biggest accomplishment.
My advice to any emerging credit professional is to communicate and negotiate while being honest and fair. The best outcome for your business is to recover a debt with the least expense and intervention as possible. I find picking up the phone and having an honest conversation will help you to assess the risk of the situation in a way that cannot be communicated by text or email. Work with your customer for a repayment option that is achievable while also retaining the customer relationship. I believe that treating people fairly and communicating exactly what you expect will generally result in a mutually beneficial outcome.
The biggest professional challenge I have faced is the impact of Covid on the building industry and management of credit exposure. The building and construction industry are experiencing shortages of Timber and Steel pushing the prices high and limiting supply to our customers. From a credit perspective this has been a difficult time to manage as our customers are working with fixed priced contracts while paying unanticipated prices on supplies. In addition to this we have seen a reduction in trade credit insurance limits across the industry. It is a balancing act at the moment, supporting our customers on credit so they can complete projects and keep their cash flow going while still limiting our exposure and trading within agreed terms.
What has being a member of the AICM done for you?
At the start of my career the AICM provided invaluable training to learn the practices and principles of credit management. Over the years the AICM has also given me the opportunity to connect with like-minded individuals. Making connections in the credit industry is the best way to refine your skills, learn from and support other credit professionals.
My favourite thing to do is to go camping with my family. We love to get away in our caravan to enjoy the fresh air and build family memories. I also love gardening, socialising with friends, reading and a good wine.
The Australian Institute of Credit Management welcomes our Partners for 2022
National Partners
Trusted Insights. Responsible Decisions.
Divisional Partners
Official Division Supporting Sponsors
Our National, Divisional and Professional Partners support and work with the AICM to promote the Institute’s activities, represent the Credit Industry and develop the careers of all Credit Professionals. As these organisations support your Institute and your Industry please consider them when you require assistance.
