Non recovery of organisation debts 107-20022631

For:

• Bankruptcy Team, see Step 1 in Table 2
• all other Debt Staff, go to Step 2

For a non-recovery decision about:

• special circumstances interest charge waiver, go to Step 3
• short term solvency hardship, go to Step 4
• insolvency or bankruptcy, go to Step 5
• an organisation that has changed owners or ceased operation, go to Step 11

Manual exclusions apply when an administrative error results in an interest charge. See Interest Charge (IC) for Centrelink debtors no longer receiving payments.

The Interest Charge forms part of the debt owed. Waiver provisions that relate to debts can also be considered for the Interest Charge component. See Special circumstances debt waivers.

Is a special circumstances interest charge waiver required?

• Yes, code the waiver. See Step 1 in Table 3
• No, procedure end here

Can the organisation meet their normal expenses? Note: do not request financial documents to confirm hardship.

• Yes, negotiate a suitable arrangement. See Recovering debts from organisations
• No, see Step 2 in Table 3

A company will have an Australian Company Number (ACN). To determine if the organisation is a company:

• find the Australian Business Number (ABN) from the Organisation Information (ORI) screen or from the XRN field
• open the ABN Lookup webpage and:
• key the ABN in the Search field > [Enter]
• the search details will show. This includes any Australian Securities and Investment Commission (ASIC) registration details, which shows the ACN

Does the organisation have an ACN?

• Yes, it is a company, go to Step 6
• No, it is not a company, go to Step 10

External sources can supply information regarding a company’s insolvency. The Bankruptcy Team will DOC the record when this occurs.

Has the Bankruptcy Team received advice that the company is insolvent?

• Yes, no further action required. Procedure ends here
• No, go to Step 7

Return to the ABN Lookup search. Select the link View record on the ASIC website, located next to the ACN.

Is the company status Deregistered or Strike-off action in progress?

• Yes, the insolvent process has been finalised and does not require action from the Bankruptcy Team. Permanently write off the debt, see Step 4 in Table 3
• No, go to Step 8

Get the administrator or liquidator contact details by completing an ASIC notice search:

• go to ASIC notice search
• key the organisation name or ACN in the Search field > [Enter]
• go to the latest entry > View
• the liquidator or administrators name and contact details are on the bottom of the notice

Did the search return a result?

• Yes, go to Step 9
• No, the company is not insolvent. Go to Step 11

Record all the details on a DOC:

• ABN and ACN
• ABN status. For example, 'Active'
• Company status listed on the ASIC notice search. For example, 'In Liquidation'
• Notice type listed on the ASIC notice search. For example, ‘Notice of appointment as liquidator’
• Liquidator/administrator name and contact person
• Date of appointment

Transfer the DOC to the Bankruptcy Team.

Send an email with the details to the Bankruptcy Team.

Procedure ends here.

Are the organisations debts included in the sole trader/partners personal bankruptcy?

• Yes, see What to do when a customer is bankrupt
• No, go to Step 11

Note: the Bankruptcy Team will decide if the debts are recoverable. This will occur at the end of the personal bankruptcy period.

Former owners of an organisation may advise the business is no longer in operation. A cancelled ABN or business name may indicate the organisation has ceased operation or changed owners.

Has the organisation changed hands or ceased operation, preventing any recovery action?

• Yes, permanently write off the debt. See Step 4 in Table 3
• No, pursue recovery. See Recovering debts from organisations

Bankruptcy applies to an individual (sole trader/partnership).

Insolvency applies to a company.

For:

• bankruptcy, see What to do when a customer is bankrupt
• insolvency, go to Step 2

If the insolvency information is not known, contact the administrator or liquidator.

Is contact with the administrator or liquidator required?

• Yes, go to Step 3
• No, go to Step 4

Ask the administrator or liquidator these questions:

• Is the insolvency ongoing or has it been finalised?
• If finalised, on what day was it finalised?
• If ongoing, will unsecured creditors receive dividends?
• Is the business still trading?

Ask for a:

• Report to Creditors (Form 529)
• Formal Proof of Debt/Claim Form (Form 535)

Resubmit the DOC/activity for 10 days to wait for a response.

Note: contact details for the administrator or liquidator are in the referral DOC or in the ASIC notice search.

Use the ASIC notice search to check the status of the company. The status will show as In liquidation or Administrators Appointed.

If the company is under:

• administration, go to Step 5
• liquidation, go to Step 7

Use the ASIC notice search to check the status of the company. It will show as Subject to a Deed of Company Arrangement.

Is there a DOCA in place?

• Yes, temporarily write off the debt. See Step 3 in Table 3
• No, go to Step 6

The administrator advises if the company is returning to the directors through the Return to Creditors Report (Form 529).

Has the company returned to the directors?

• Yes, remove any Insolvency – Temporary (IRT) write off:
• go to the Debt List (OPDL) screen
• ‘S’elect the debt and key 'OPWO' in the Nxt field to navigate to the Write-off screen
• key ‘Y’ in the Restart Recovery field > [Enter]
• repeat for each debt that requires removal of the IRT write off
• pursue recovery of outstanding amounts. See Recovering debts from organisations
• No, go to Step 7

Insolvency ends when the company’s assets are distributed.

Notification of the finalisation is found using the ASIC notice search. The company is deregistered by ASIC and no longer operates.

Has insolvency been finalised?

• Yes, permanently write off the debt. See Step 4 in Table 3
• No, go to Step 8

The liquidator advises of any dividends. They will:

• call for the lodging of a Formal Proof of Debt (Form 535), and
• publish a notice to advise creditors

Use an ASIC notice search to locate the notice.

Are there any dividends expected?

• Yes, go to Step 9
• No, permanently write off the debt. See Step 4 in Table 3

Before the payment of any dividend, the liquidator requires a Form 535 to formally prove the debt. Complete the form and return to list Services Australia as a creditor.

The Form 535 is not standardised and may vary between liquidators. Therefore, request a new form from the liquidator for each insolvent organisation.

Complete the Form 535 and return it to the liquidator:

• on a DOC record the return of the form to the liquidator
• permanently write off the debt. See Step 4 in Table 3

Note: dividends can still apply to a permanently written off debt. Do not restart recovery. Tell the administrator to issue the dividends even if the debt is written off under insolvency.

Update the interest via Financial Customer Care in Customer First:

• go to the Debt List (OPDL) screen and:
• note the amount of interest listed in the interest charge column for the applicable Debt ID
• for a partial waiver, use the Debt Interest History screen in Customer First to determine the waiver amount. See Viewing and updating Interest Charge (IC) via Financial Customer Care in Customer First
• ‘S’elect the Debt ID the waiver applies to > [Enter]
• go to the Add Waiver (OPWAA) screen and complete:
• Reason Waived field. For special circumstances, key ‘EUC’ (extreme and unusual circumstances)
• Int Chg Amount Waived field, key the interest charge waiver amount
• Comments field, explain the interest charge waiver reason
• press [Enter]
• key ‘OPAF’ in the Nxt field > [Enter]
• key ‘Y’ in the Finished field > [Enter]
• repeat for each individual debt that requires a waiver
• go to the Debt List (OPDL) screen. Check the interest charge to ensure the waiver has applied correctly
• record the details on a DOC and include:
• CRN balance outstanding after waiver applied
• Debt ID/s
• amount waiver for each Debt ID
• total amount waived
• waiver reason, for example EUC
• the outstanding balance
• the section of the Act
• details of the special circumstances
• negotiate an arrangement for any outstanding amount to prevent interest accruing in the future. See Recovering debts from Organisations

Procedure ends here.

On the Activity List (AL) screen, ‘S’elect the DMN/RCV No Arrangement activity > [Enter].

Note: if there is no DMN/RCV activity, key ‘OPDL’ in the Nxt field > [Enter].

‘S’elect a debt and key ‘OPWOA’ in the Nxt field:

• complete these fields:
• Reason, key 'STH' for Short Term Hardship
• End date, key the date the write off will end. The maximum default end date is 12 months for STH
• Comment, key the reason for the write off
• key OPAF in the Nxt field > [Enter]
• key 'Y' in the Finished field > [Enter]

The write off applies to all debts.

Record the details on a DOC and include:

• CRN balance
• Debt ID/s
• write off reason, for example 'Short Term Hardship'
• the end date of the write off
• the section of the Act
• details of the financial hardship
• any notices issued, for example a Q313

Procedure ends here.

Bankruptcy Team:

• on the Activity List (AL) screen, 'S'elect the DMN/RCV No Arrangement activity > [Enter]

Note: if there is no DMN/RCV activity, key 'OPDL' in the Nxt field > [Enter].

‘S’elect a debt and key 'OPWOA' in the Nxt field:

• complete these fields:
• Reason, key 'IRT' for Insolvency Temporary
• End date, key the date 12 months from the day the organisation entered administration
• Comment, key the reason for the write off
• key 'OPAF' in the Nxt field > [Enter]
• key 'Y' in the Finished field > [Enter]
• the write off applies to one debt at a time. Repeat the above steps for each Debt ID that requires an IRT write off.
• record the details on a DOC and include:
• CRN balance
• Debt ID/s
• write off reason. For example 'Insolvency Temporary'
• the end date of the write off
• the section of the Act
• details of the insolvency. For example, the administrator details including the date of appointment
• the date formal proof of debt was sent to the administrator
• details of the write off reason
• create a Display on Access (DOA) DOC with an expiry date 12 months in the future. DOC that the organisation is under administration and to refer any enquiries to the Bankruptcy Team

The administrator will advise if the organisation:

• enters into liquidation, or
• is returned to the directors

Update the record when required.

Procedure ends here.

On the Activity List (AL) screen, 'S'elect the DMN/RCV No Arrangement activity > [Enter].

Note: if there is no DMN/RCV activity, key 'OPDL' in the Nxt field > [Enter].

‘S’elect a debt and key OPWOA in the Nxt field to navigate to the Add Write-off screen:

• complete these fields:
• Reason, key IRD for Insolvency - Discharged
• Comment, key the reason for the write off
• Nxt, key OPAF > [Enter]
• Finished, key Y > [Enter]

The write off applies to one debt at a time. Repeat above steps for each Debt ID that requires an IRD write off.

Record the details on a DOC and include:

• CRN balance
• Debt ID/s
• write off reason, for example 'Insolvency - Discharged'
• the section of the Act
• detail the reason for the write off

Bankruptcy Team

Include on the DOC:

• details of the insolvency. For example, the liquidator details including date of appointment
• detail the reason for the write off
• the date the insolvency was finalised (if applicable)
• the date the formal proof of debt was sent to Administrator (if applicable)
• details of expected dividends (if applicable)

When dividends are expected:

• create a Display on Access (DOA) DOC to expire 12 months in the future
• DOC that the organisation is in liquidation and to refer any enquiries to the Bankruptcy Team
• include details about any expected dividends

Procedure ends here.