Voidable Mitigation

Litigation can be an expensive and time-consuming exercise and today’s enterprise is looking for more than just assistance at the time an issue arises. SV Voidables can help you take proactive steps to mitigate your or your client’s risk of being pursued by Liquidators or Bankruptcy Trustees for voidable transactions. Adopting a proactive approach requires starting well before a debtor becomes insolvent. It requires forensic due diligence of internal controls and documented trading terms and conditions, with the aim of applying consistent recovery strategies across all trade debtors. How to prevent litigation? Key indicators that Liquidators and Bankruptcy Trustees look at when deciding to pursue a creditor for voidable transactions are, as a non-exhaustive list:

  • Excessive pressure by debtor collection teams within companies
  • Statutory demands and other informal demands
  • Long outstanding debts
  • Round payments
  • Dishonoured payments or post-dated cheques

Therefore, it is important to be aware of the risks current debt collection practices may be placed on you or your client’s business. For example:

  • Debtors not complying with trading terms
  • Trading terms inadequate to help recover debts owing
We compare those terms to a Matrix analysis, which scores the terms relative to a cross-section of other terms and conditions in the market. That score can be provided to your lawyer to assist in drafting updated terms.
The Personal Property Securities Register (PPSR) We undertake an audit of a sample of trade debtors to assess the effectiveness of the PPSR registrations.
Internal controls over trade debtor recoveriesWe perform a review of:
  • how correspondence with debtors takes place and frequency;
  • what information to seek from your debtors, when payment is difficult to come by;
  • effective recovery strategies; and
  • consistency in approach.

These are all issues that can leave you or your client open to recovery action being taken by Liquidators or bankruptcy Trustees.
We can further assist by training employees to handle correspondence with debtors, so that they stay within the bounds of the good faith defence.

Are you concerned about your financial position?
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