EY Oceania absorbs Canberra's Kazar Slaven

New EY Oceania partner
Henry Kazar 

CANBERRA-based insolvency practice Kazar Slaven has been taken out by EY Oceania, a division of global professional services heavyweight, Ernst & Young (EY).

In a note to clients last Thursday, firm principals Henry Kazar and Michael Slaven said the transaction would be completed by the end of the month.

"We’re pleased to advise you that the professional services firm Ernst & Young (EY), has moved to acquire Kazar Slaven," the pair said.

"The acquisition is intended to be completed by the end of September 2015. Following completion, we will both join EY Oceania as partners, and 11 Kazar Slaven employees will be made offers of employment by EY." 

According to the Kazar Slaven website the firm has 18 partners and staff. Four have the surname Kazar.

Interestingly, while the note acknowledged the potential for a shift to accommodate EY's creditor-based specialisation, it also assured its existing, personal insolvency-focussed network that these relationships remain paramount.

SV ditches executive director

Ditched SV Partners executive director
Stephen Hathway
Photo courtesy SV Partners 

STEPHEN Hathway, the man who with Tim Heesh established SV Partners in NSW almost a decade ago has been dumped by the firm, with clients advised of his departure via email last week.

"Dear Colleagues, we advise that Stephen Hathway, Director in our New South Wales practice, has ceased to have an active involvement with SV Partners and is presently on extended leave. 

"Stephen joined SV Partners in 2006 and was an integral part of growth in our New South Wales practice," the firm said.

When contacted Hathway said he couldn't say talk about the reasons for his departure until the details had been finalised.

"I set up SV in NSW with Tim Heesh nine years ago but it's interesting, you get employed by firms and obviously take an employment contract, but then I took about 120 appointments in my own name," he said.

In circumstances where people leave firms, Hathway said there is work that registered liquidators have in terms of specific appointments that employment contracts don't adequately account for.

"Some are in our own name and we've been put there by creditors, not necessarily by the firm," he said, implying that appointments of this kind would need to be accounted for in his compensation and entitlement arrangements. "I'm a shareholder of SV so that also has to be worked out," Hathway added.

SV founder Terry van der Velde declined to go into detail about why Hathway had left. He said the firm has "... a clear process for staff transition and normal procedures are being followed to ensure that all client work continues according to requirements. The full SV Partners team is supporting clients during this change," van der Velde said.

Got a SiNful tale to tell?

More assertive ATO good for insolvency professionals as wind-ups jump in August

ATO-initiated wind-up activity
from March to August, 2015
Chart courtesy Insolvency Notices

ANY thought that the Australian Tax Office (ATO) might begin reducing the number of wind-up applications it's been lodging since it set a new monthly record of 582 wind-ups last May has been dispelled by the August numbers, which show the tax man sought to appoint liquidators to 488 companies last month.

This is almost 100 more than the number lodged in July and also exceeds the June figure of 449 wind-ups lodged. The long term average for ATO-initiated wind-ups of companies with unpaid tax debts is 92 per month.

In a statement the tax office confirmed it had adopted a more active policy on debt recovery, an essential change one would've thought given there's approximately $20 billion of recoverable debt on the ATO's books. More than 60 per cent of the arrears is owed by small to medium-sized enterprises (SMEs).

"The ATO is focused on making it as easy as possible for businesses, and other taxpayers, to understand and meet their tax obligations," the ATO said.

"As the Commissioner said during his address to the National Small Business Summit on 16 July, our intention is to be more active to prevent debts, to provide appropriate help and support when people are in debt, to take the right action to prevent debts from escalating, and to take legal action earlier when it is warranted."

Michael McCann, president of the Australian Restructuring Insolvency & Turnaround Association (ARITA) said there is no doubt the ATO has taken a more assertive stance. The question is whether it is a temporary measure to deal with a back log or is to be sustained.

"If there is in fact a catch-up that's one thing but if there is actually a sustained program by the ATO of being more assertive that would suggest that it is going to be acting earlier," McCann said.

Ex-liquidator avoids incarceration

Ex-liquidator Geoffrey Stewart Turner has avoided gaol time after a magistrate last week handed down a raft of suspended sentences in the NSW Local Court.

Turner pleaded guilty to 11 counts of dishonestly obtaining financial advantage by deception and two counts of obtaining money by deception on July 15 this year. Each count carries a two year term of imprisonment.

Last Friday Local Court Magistrate Joanne Keogh suspended the custodial component of each sentence, ordering instead that Turner enter into a good behaviour bond for a period of two years.

The charges followed an investigation by the Australian Securities and Investments Commission (ASIC) which found Turner failed to carry out his duties as a liquidator after reviewing 60 external administrations as part of its proactive liquidator compliance program.

The ASIC investigation saw Turner deregistered as a liquidator in late 2012 after entering into an enforceable undertaking with ASIC. Among other things the EU required him to request ASIC cancel his liquidator's registration.

According to the EU, Turner must never apply to be re-registered as a liquidator and never perform duties or functions that are the exclusive preserve of registered liquidators.

Shrinking insolvency division no threat to supervision: ASIC

Ex-ASIC insolvency team
member John Laird  

THE corporate regulator has rejected suggestions that its capacity to police the insolvency profession is diminishing, despite the departure of two senior insolvency team members in recent months and an almost 20 per cent reduction in insolvency division staff since 2011.

Neither John Laird or Marc Robinson would comment on their departures from the Australian Securities and Investments Commission's (ASIC) insolvency unit when contacted this week. Laird invoked confidentiality constraints. Robinson did not respond to a request for comment.

Sources told SiN that Laird, who according to his Linked In profile led the unit's investigations on major corporate collapses, is setting up his own consultancy.

Robinson, a senior insolvency specialist, is said to be headed to the Australian Tax Office (ATO) to work as a law interpretation specialist on its cross-agency task force combatting illegal phoenix activity.

If the most recent figures are accurate, the departures of Robinson and Laird leave ASIC with 21 insolvency team members monitoring almost 700 registered liquidators. That's about 33 liquidators per staffer and is representative of a trend of declining staff numbers within the division charged with the supervision of registered insolvency practitioners.

ASIC's 2010/11 annual report stated that there were 28 insolvency division staff regulating 670 registered liquidators. In 2011/12, staff numbers were reported as 24. Liquidator numbers meanwhile had risen to 680.

ATO wind-ups: elevated recoveries continuing

ATO wind-up activity persists
at record levels.
Chart courtesy Insolvency Notices

IS 400 wind-up applications per month the tax office's new normal? It's looking that way after the numbers for July, collated by Insolvency Notices, were published yesterday.

As the attached chart indicates, wind-up applications filed by the Australian Taxation Office (ATO) came in at around 400 in July, lower than the previous two months but still well above the long term monthly average of 92. Not that this should surprise anybody given the crackdown was flagged by the tax commissioner, Chris Jordan back in May, when a record 556 wind-up applications were lodged.

"While the majority of taxpayers voluntarily pay their taxes on time or soon after, collecting outstanding taxes is an ongoing challenge for us. Despite our increased efforts, the amount of debt we have to collect has continued to rise in recent years," Jordan said in a speech to the Tax Institute on May 19, 2015.

"We will be taking legal action earlier when warranted, initiating bankruptcy and wind-up action where there is evidence that a taxpayer is insolvent, and looking to use other statutory powers where businesses have failed to pay employee superannuation entitlements or pay amounts held in trust," he said.

Jordan's comments were backed up by deputy-commissioner Cheryl-Lea Field, who said that about half of the companies subjected to an ATO-initiated wind-up notice would proceed to liquidation. And each month since has confirmed that tax debt recovery activity is persisting at historically elevated levels.

After the surge in wind-ups lodged in May - which coincided with a supposedly pro-SME Federal budget - the June number dipped to around 450. But when added to July's numbers they reveal that the ATO has initiated around 1,400 proceedings against SMEs in three months. By comparison it lodged 1,333 winding up applications for the entire year in 2013/14. August meanwhile is on track to record another 400-plus figure.

Given SMEs account for around 60 per cent of the more than $20 billion in collectable tax debt, it might take the ATO some time to make a dent in the arrears, even at 400 per month. That said, a Federal election is due no later than January, 2017, so this more vigorous and comminatory ATO may well assume an altogether gentler demeanour over the next 17 months. 400 per month may in time appear an aberration. Only the opinion polls know.

Chart courtesy Insolvency Notices

Got a SiNful tale to tell?

Octaviar: Kerr considering fresh tilt at Barnett and Fletcher

RSM Bird Cameron's David Kerr

HAVING recently secured a $12.35 million settlement from Fortress Credit Corporation, Octaviar Limited's (OL) special purpose liquidator is, we are reliably informed, contemplating resurrecting a $515 million proof of debt claim against the liquidators of Octaviar Administration (OA).

The NSW Supreme Court made orders on May 26, 2015, discontinuing proceedings first brought by OL's receivers against Bentleys partners Kate Barnett and Bill Fletcher in 2014.

The orders made no directions as to costs and crucially, the defendants were prevented from raising any time bar defence, meaning Kerr is free to re-litigate the proof of debt adjudication issue at the heart of the dispute.

In their statement of claim, PPB as OL's receivers had argued that at the date of OA's winding up on October 3, 2008 it owed OL, OA's ultimate holding company, $514,685,948.12c.

Barnett and Fletcher's defence listed multiple grounds showing why OA's debt should be offset, along with counter claims they argued meant OA's parent owed it money.

When contacted by SiN yesterday, Kerr declined to confirm or deny he was reviving the claim, saying only that he was unable to assist "at this time".