A business owning three newsagencies went broke months ago, owing close to two million dollars. The liquidators report was released recently, declaring that the business had been trading while insolvent for at least two years. This finding could have serious consequences for the directors.
ASIC defines insolvent trading:
An insolvent company is one that is unable to pay all its debts when they fall due for payment.
Yes, the definition is that simple. The director of the company to which I refer above was a blowhard, a gunna my mother would have called them. Gunna do this or that, with an attitude that they were an amazing business operator. Except, they were not. Many suppliers to the channel were left out of pocket along with banks and the ATO – and through the ATO, all Australians.
In my experience, often, the louder someone is about how great they are in business the worse they are.
ASIC provides advice on what to do if your company is insolvent:
If your company is insolvent, do not allow it to incur further debt. Unless it is possible to promptly restructure, refinance or obtain equity funding to recapitalise the company, generally, your options are to appoint a voluntary administrator or a liquidator. The three most common insolvency procedures are voluntary administration, liquidation and receivership.
ASIC has plenty to say on insolvent trading, including:
If dishonesty is found to be a factor in insolvent trading, a director may also be subject to criminal charges (which can lead to a fine of up to $220,000 or imprisonment for up to 5 years, or both). Being found guilty of the criminal offence of insolvent trading will also lead to a director’s disqualification.
ASIC has successfully prosecuted directors for allowing companies to incur debts when the company is insolvent, and has sought orders making directors personally liable for company debts. ASIC also runs a program to visit directors, where appropriate, to make them aware of their responsibilities to prevent insolvent trading.
If you think you may be insolvent, reach out to someone you trust for advice and to be by your side as you navigate the challenges.
The newsagent in my story did not want help. They said there was no problem.
You have wrapped up a hit piece on a business competitor in some sop about insolvent trading.
This is mean teen girl bully stuff.
Why would anyone ever trust you. You are a terrible human being.
You are wrong David. The business to which I referred was not a competitor, never was. Further, I have provided no identifying details. So, no, this post is not a hit piece. The facts are thew facts.
FYI, I could have linked to the damning liquidator report, but I did not, deliberately.
Thanks for the ignorant judgement.
People who read this blog know who you are talking about.
You have regularly had arguments with this person on the threads of this blog.
Just own your behaviour.
David, you are wrong. This post has nothing to do with that person – Ken Wilson. While I was sent a report by the liquidator of Ken’s business, that was many months ago. The business and person I mention in this post is not Ken Wilson, they are not in the same state. Indeed, I have never mentioned the business or person referred to in this post ever before on this blog.
Now, you appear to someone who will only believe what they think. If you make a time and meet with my at my office I can show you the liquidator report, to show you are wrong.
Facts matter.
I agree, own your behaviour. You are wrong. Further, business owners who are trading while insolvent need to own their behaviour.
I wont be meeting with you.
I have met you at events in the past.
You cant be trusted.
Okay, so to be clear, you don’t want to meet to see the evidence proving that what you have written is wrong. Yep, that makes sense. Maintain your ignorant range.
So let me get this right. You are inviting me, a person you have only spoken ten words to in your life in passing, to your office to show me a liquidators report of someone you have no relationship with other than they hurt your feelings when they wouldn’t join your newsagency group?
You are doing this to prove to me that the person you are smearing in this post is not another person that you have attempted to smear via this blog in other posts?
Yep crystal clear.
David, whether I have met you or not is not relevant.
Your assumption about feelings being hurt is wrong.
Your assumption about newsXpress is wrong.
I am not smearing anyone in the post, because they have not been identified whatsoever. Even if I had named them it would not be a smear to state the facts.
You have personalised your comments based on stuff you have made up.
I offered to meet with you to present the evidence that will prove your assumptions and allegations to be wrong. It is up to you if you want to see the facts.
Every business owner has an obligation regarding solvent trading. Each business in the newsagency channel that goes down, does so at a cost to all in the channel.
Blowhard and gunna.
Ooooh and if I wanted too I could have released the report. I am a nasty guy…. but not that nasty.
Go back and read some of the bitter stuff you write. Stop being such a jerk.
Label me however you like David. I note that you don’t want to take the step that will show you are wrong.
Did the newsagent to whom I refer make plenty of claims that were not true or they did not fulfil? Yes.
Did the business collapse in a financial mess, costing millions? Yes, according to the liquidator.
Did the newsagent trade while insolvent? Yes, according to the liquidator.
The purpose of the post was to explain insolvent trading and provide access to details from ASIC that are helpful.
You, on the other hand, made stuff up and attacked, as is your right.
My offer for you to see the evidence remains available.
Its a lot of money to owe. Clearly some poor credit controls by suppliers/banks.
Jim with my supplier hat on, it can be challenging if your focus is helping small businesses. You want to believe the story / pitch. You don’t want to be the party that tips a business over the edge.
Also, I have seen situations where a collapse has happened very quickly, without notice or expectation, but where the total owing has been north of $500K – shocking all suppliers.
Ernest Hemingway a character in one of his books asked the question, “How do you go broke?”
“Slowly at first then suddenly” was the reply.
How so very true.
Many more to come this next twelve months unfortunately best advice if your doing it tough come to some arrangement with your suppliers and the landlord.
I should add,
One can avoid Reality but not the consequences of Reality.
Be fair to everyone, especially yourself – don’t deny the situation you are in,seek help, it’s out there.
‘Safe Harbour’ protection is now available for directors. This enables them protection from personal liability from trading whilst insolvent. It’s intended to prevent them being forced to ‘pull the plug’ prematurely.
Became effective 19/9/17.
Hi Edward,
The legislation you mention has been passed however not effective until July 2018 or six months after the Bill receives Royal Assent or earlier if proclaimed by the Governor General.
It is only applicable to those that have undertaken through Voluntary Administration or a proposed scheme of restructuring, however, Safe Harbour protection is not applicable where once a line is drawn under past trading the new scheme doesn’t show whilst it can trade but it can’t pay off the current liabilities incurred in the future trading.
The real point, I believe, is that most people in business know they are in a spot of trouble and should seek some professional or superior knowledgeable help sooner than later.
Mark points out that later is really harming all those they deal with and the industry overall.
His comments were one of awareness and I believe of genuine help for as a supplier it is a nightmare out there of “Whose to Bless and Whose to Blame”.
“Slowly then suddenly” be quick get help now if you need it.
Did I hear my name mentioned Dave? I’ve stopped looking at Mark’s “look at me, look at me” website a while ago but someone sent me a txt that I had made a guest appearance again.
Any business owner will operate their business, tip in more money and keep working unpaid in the hope that things turn around. They’re usually holding on for grim death in the hope it will come good. Unfortunately it seldom does, Mark makes out this to be bad, to me, its what every human being will try and do, the bad part is it didn’t turn around, however they tried. The main part of the scare mongering of “watch out, ASIC will come after you is crap”. ASIC are only going after mega collapses where they believe the Directors have assets outside their business web. For most of us, all our money and our homes went in the final process…they’re ain’t nothing else because we pledged everything because we believed we were on the right track. No Newsagent or small business person is going to jail… Mark just puts the headlines up to say “look at me!”
No, Ken, no guest appearance. My post is not about you.
Since you have made it about you, however, I have the report into your business. The financial cost on your suppliers and others involved in the business was considerable. You made a lot of noise about how good you were at business. The collapse of your business and the report indicate otherwise.
Say the post and the blog are look at me all you like. No one makes anyone read this.
Anyone running a business has a serious obligation to their employees, shareholders, suppliers and financiers. Taking a cavalier attitude to these obligations disrespects those stakeholders. To try and make my post about me as you have sought to do is an effort at diversion from owners of businesses that have collapsed, costing the channel millions of dollars.