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					   DEBT AGREEMENT SERVICE NEWSLETTER

In this issue:                                                                                        Issue3
   •      Outcome of Creditors’ forum                                                              June 2006
   •      Your chance to improve debt agreement forms
   •      Improved service to you from IT enhancements
   •      Your role in ensuring the accuracy of the NPII
   •      Feedback



Outcome of Creditors’ forum
Representatives from major creditors and four debt agreement administrators based in
Sydney attended a forum held in Sydney and representatives of four major creditors
attended a forum held in Melbourne last month. David Bergman, ITSA’s Advisor
Policy and Legislation, attended the Sydney forum to obtain feedback on the proposed
reforms to debt agreements. Other outcomes from the forums are addressed below.


What administrators’ fees buy (or what you get for your money)
Details of fees charged by administrators were again requested by creditors. ITSA
suggested the adoption of a model similar to that used by the financial services sector
to provide transparency and a standard approach enabling comparison between
administrators’ products. A copy of the sample fee chart is attached for your comment
and for administrators’ use to provide details of fees charged to debtors and creditors.


Some creditors are more equal than others - or are they?
A proposed reform to debt agreements is that all creditors are to be paid
proportionately in relation to the size of their debts. It was suggested that analysis of
the returns frequently received by creditors using discounted cash flows shows the
present system in effect delivers parity to creditors. For example, the net present
values of dividend streams of 58% over two years, 75% over three years and 100%
over five years are approximately equal.
Administrators supported the proposed amendment to rank creditors pari passu
highlighting the additional time and expense involved in calculating individual returns
to creditors and paying creditors over different time frames. They indicated that
reductions in administration costs would be passed onto creditors.



                       OFFICE ADDRESS: Level 16, 340 Adelaide Street, BRISBANE QLD 4000
                      POSTAL ADDRESS: PO Box 10443 ADELAIDE STREET BRISBANE QLD 4000
                                                                                                                      1
       TELEPHONE: 1300 364 785 FACSIMILE: (07) 3360 5466 EMAIL: itsa.brisbane@itsa.gov.au INTERNET: www.itsa.gov.au
           OFFICES IN ADELAIDE BRISBANE CANBERRA HOBART MELBOURNE PERTH SYDNEY TOWNSVILLE
Use of hardship provisions
Creditors advocated access to hardship provisions by debtors to avoid some of the
serious consequences associated with entering into a debt agreement especially when
there in only one debt or a small number of creditors. Creditors encouraged
administrators to familiarise themselves with their hardship provisions and in relevant
cases to refer debtors directly to their creditors hardship section.



Your chance to improve debt agreement forms
The debt agreement forms for the Proposal, Statement of Affairs and Statement of
Claim and Voting are being reviewed to ensure that they capture all relevant
information about the debtor’s financial affairs and to inform debtors of the
consequences of their actions. You suggestions for improvement to the forms such as
questions that you want answered so that you can make informed decisions on
proposals can be emailed to itsa.qld.da@itsa.gov.au or faxed to (07) 33605494 by 7
July 2006.


Improved service to you from IT enhancements
Improvements last month included the introduction of one report per debtor to
creditors, separate voting statements for joint proposals and the provision for creditors
to combine all debts onto one voting statement for a debtor.
We aim by 31 July to send the Official Receiver’s report to creditors electronically via
an email with a number of attachments. The attachments will be a Report of Proposal
Accepted for Processing, a scanned image of the proposal and Statements of Claim
and Voting for each liability on the proposal. Creditors are asked to nominate the
email address for receipt of new debt agreements by emailing Robyn Gall. It is
important that the advice sent to creditors electronically is accessed for two purposes -
firstly to cease recovery action against the debtor and secondly to inform the creditors
for voting purposes.


Your role in ensuring the accuracy of the NPII
To maintain the accuracy of the National Personal Insolvency Index ITSA relies on
accuracy and timeliness of information provided by our clients. Debt agreement
administrators are reminded to ensure that debtors provide full details of important
identifiers on their Statement of Affairs and Debt Agreement Proposal such as middle
names and previous addresses and to advise the Debt Agreement Service within 7
days of finalisation of debt agreements.


Feedback
ITSA values the participation of our stakeholders in the debt agreement system. Your
comments and suggestions for the DAS are welcomed by Digby Ross, National
Manager of the DAS on (07) 33605400 and Bob Siemon, Operational Manager on
(07) 33605452. Please continue to direct your queries on individual matters to the
DAS teams in Perth and Brisbane.


                     OFFICE ADDRESS: Level 16, 340 Adelaide Street, BRISBANE QLD 4000
                    POSTAL ADDRESS: PO Box 10443 ADELAIDE STREET BRISBANE QLD 4000
                                                                                                                    2
     TELEPHONE: 1300 364 785 FACSIMILE: (07) 3360 5466 EMAIL: itsa.brisbane@itsa.gov.au INTERNET: www.itsa.gov.au
         OFFICES IN ADELAIDE BRISBANE CANBERRA HOBART MELBOURNE PERTH SYDNEY TOWNSVILLE