Hi everyone,
This is a very Hairy situation.. [
]
I have found out of a business that has gone into liquidation. Although technically, I have nothing to do with it, I have not caused it, and new nothing about it, now that it’s been brought to my attention, it does affect me indirectly, so I am trying to find a solution to the problem as it stands, for the parties involved.
THE SCENARIO
The businesses premises has been secured by the tax department, who are currently conducting an audit of the business accounts. This business, prior to the tax dept coming in, comitted to buying 2 properties totalling $850K, they put down a deposit of $15K in cheques, which have cleared. On the contract they put the ‘and/or nominee’ clause. There is open settlement on 1 of the properties, the other is 60 days. Now the problem is that these 2 properties need to be finalized. My questions are…
1) Can the tax dept seize the properties, even though settlement hasn’t occured? Logically, they haven’t changed out of the vendors name’s yet, but the deposit has been received.
2) Using the ‘and/or nominee’ clause, can you change the purchesors to exclude the business that has gone under? The
3) If the deposit was given by the liquidated business, can the tax dept, stop the proceedings of the sale and reclaim the 15K deposit?This is not a very healthy scenario, however I am thinking (as a solution) that there may be a group of families who may be willing to take on the purchase of these houses in some sort of joint venture and rent it back to another business (not the original businees who went belly up).
In order to do this we (the willing parties) need to form some sort of ‘investing group’ or the like and put this groups/entity on the contract rather than the liquidatated business.
How is this done and how quickly can this be done and for how much money?Basically, including stamp duty of approx 49K, legals etc, the properties of 850K, we would be looking for at least 6-8 people who are willing to do a joint venture and take out a joint loan of 1 million dollars. Can you take out a joint loan?
So, how do is a grouped formed in order to buy property, protect themselves from litigation and the tax dept and get the needed finance to take over the purchase of these properties.I really am trying to find this out in attempt see how we can rescue the people affected by this business going under (in the vicinity of 100 families and many lost jobs).
I know there is a solution out there, and I may not be able to commit financially (NO Daddy Warbucks here, unfortunately) to this cause, but I’d like to think that I can try to do something to help these families.
There is a meeting for those affected by the business closing down tonight at 8:30pm Victorian time.
Any suggestions…
Sooshie [?]
There are no problems, only solutions
I think you’re possibly looking at 2 main outcomes here.
1. The business defaults on the purchase contract and loses their deposit money ($15k).
2. They sell or assign their option to purchase to another entity (possibly for a $15k), but this will incure a double-stamp duty and if as you say it’s about $49k won’t make it worth the hassle. Unless, the properties have been bought under value or increased in value and the option can be sold for more than the deposit and stamp-duty ($63k).
If the assignment of contract is deemed arms length you should avoid double-stamp duty, however are the directors (most likely arms length party) able to do so if their business is being liquidated by the tax department?
I don’t believe the tax department has the right to reclaim the deposit monies, and I’m sure they can’t foreclose on the properties given they have not yet been settled.
Who’s name were the purchase contracts signed in?
Is the deposit money $15k each or combined?
Are you sure the stamp duty is roughly $49k, sounds a lot?
“All the world’s a stage, and you choose the role you want to play on that stage” William ShakespearHi Leigh,
Thanks for your response.
The stamp duty including transfers, stamp duty on loan, property and mortage registration on property 1 (approx 410K) is approx equal to 23K (I’ve rounded the figures to the nearest whole amount)
On property 2 (approx 440K purchase price)the costs is approx 25K.
The business bought the property like this “business X and/or nominee”
So I thought they could just exercise the ‘and/or nominee” clause, and nominate another party to take over the purchase, thereby only one stamp duty cost is necassary (per property) as the business is unable to complete the sale due to frozen accounts, so if another party (which the business nominates) can put up the costs, they could still go ahead with the purchase…ie only one sale on each house.
The deposit is combined, property 1, deposit 10K, property 2, deposit 5K
I was also under the impression the tax dept can’t seize the house as assets if the sale has not gone through, or is in the process of going through.
If the assignment of contract is deemed arms length you should avoid double-stamp duty, however are the directors (most likely arms length party) able to do so if their business is being liquidated by the tax department?
I’m not sure I understand exactly what you mean, but I hope this helps some.
The business was a sole individual with no business nouss [], but he would gladly give up the deposit (towards the sale) if someone could continue on with the the sale, using the nominee clause. He cannot continue the sale because he wouldn’t be able to get finance for it. Does he need to “sell or assign ” the option to purchase if he used the and/or nominee clause?
Or does he have to either
a) forfeit deposit
b) sell his portion (ie deposits) to someone willing to take on the sale of the properties…How would we go about setting up another entity to take on the sale? The entity would be a collective of willing financial persons entering on a group partnership, with the aim to continue on with the sale and rent it back to a similar business.
Cheers
Sooshie []There are no problems, only solutions
You’ve got my attention Sooshie. What type of properties are these ? Could you explain the situation a little more. It sounds like a deal worth looking at.
Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinSooshie
If the business has gone into administration, then the director or owner will no longer have any control over teh company. An administrator would have been appointed and they are teh ones that make all the decisions from the time of their appointment.
If is was possible to nominate another purchaser, I think the administrator would have to do it. They may agree to do so if it would generate some money for creditors.
But in Victoria it is obly possible to nominate someone without incurring double stamp duty, if you had a written agreement with them prior to the signing of the original contract.
And I beleive that the law has recently chaged and that it may not even be possible to do this any more. ie double stamp duty will be payable.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi there,
Thanks Terry, Andrew, Leigh for your responses. Currently, I am fact gathering (unlike wool gathering [
]). I should have all details by Saturday, where I will hopefully meet some of you at the seminar.I hope to see you there…
Cheers
SooshieThere are no problems, only solutions
Hi everyone,
Just to fill you in. The business that went under was my son’s thursday and friday school. They also had two properties on contract which they paid deposits for, hence this origianl post.
Plus they had just purchased new toys, equipment for the school. All gone []
All the parents were kept in the dark and the first I knew of it was when a sister of one of Phillip’s friends rang to ask if I had her brother at my house… Then she told me the school was shut…
Then the ATO sent in Auditors and the security guards, where there was a huge commotion for the children who arrived at school on Monday 26th May, to find out the locks had been changed and big burley security guards facing 2-4 year olds (kindergarden cop..kinda) with freshly breakfasted faces stained with tears.
So Thursday and Friday’s for the last week and this week (and probably the next) I’ve been doing a balancing act.
There have been a great team of money players who’ve settled the ATO debt and hopefully the school will reopen soon.
My investing goal, is to make enough money for my family to be comfortable and then to be able to support schools and charities (so the above does not happen to innocent children), including establishing a new charity focusing on prevention.Cheers everyone
Sooshie [
]“Giving is a Blessing, receiving is the bonus”
]
]
]). I should have all details by Saturday, where I will hopefully meet some of you at the seminar.The topic ‘Rescue Mission’ is closed to new replies.
