A recent decision of the Federal Court of Australia serves to reinforce importance of obtaining advice from qualified professionals.
In Turner v Stylewise Security and Glass Pty Ltd (in liq) the Court was asked to make orders terminating a winding up. Stylewise has been in business in the construction industry for 23 years. It suffered losses after the Brisbane floods and consequently had outstanding debts to the ATO.
To assist in resolving those problems it turned to an unregulated organisation which held itself out as being “pre-insolvency and bankruptcy specialists”. The following quote appears from the judgment:
“It appears that he (the director) has relied on Eagle Business Solutions to advise him whether the Australia Taxation Office would apply to wind up the company, and whether he should instruct solicitors ….”
“But, on 28 April 2015, he received a notice from Stylewise’s accountant that the company had been placed into liquidation”.
The end result of this fiasco was that for simple want of arranging someone to go to court and negotiate with the ATO on behalf of the company, the company’s business was seriously disrupted by being placed into liquidation and with significant additional costs being required to pay the liquidator’s fees as well as lawyers fees to apply to the court to have the liquidation undone. The damage to the company’s reputation is on top of that.
Presumably Eagle Business Solutions, the self styled “pre-insolvency and bankruptcy specialists” had no insurance with which to pay the losses suffered by their “client”.
The “pre-insolvency” industry is littered with such self proclaimed “specialists”.
These firms are not regulated, often have very little understanding of the intricacies of insolvency law and the serious consequences that can follow, relying on the fact that their clients often have even les knowledge and are under enormous pressure.
This case is a useful reminder to company directors to ensure that competent and professional advice should be sought in matters critical to a company’s survival.
People
With the technical skills, diverse backgrounds and practical experience to match, our teams care about their clients.
Our Expertise
We have a strong reputation for providing specialist, market-leading advice in the practices we offer. Our teams are experts in their field and provide an unrivalled service to clients.
News
We want to share our knowledge with you. A collection of news and insights into those areas in which we specialise.
Resources
We offer a relevant, easy access platform that allows clients and colleagues to gain access to relevant resources.
Contact Us
With offices in Sydney and Melbourne, our team pride themselves on always being available for their clients.
Careers
We are collaborative, respectful and inclusive. Recruiting the best talent is only half of the equation; providing a culture that enables development is the other.
See our exciting opportunities available for graduates, lawyers, legal support staff and business services professionals.