I would have to suggest he wasn't ripping people off. In fact he was likely seeing the home constructions too cheap. And likely tradies have been the ones pocketing the money.
I'm surprised - Wif my understanding being that was one of the reasons for using a company - Namely to quarantine assets in ones own name in the event of a business failure. (But anyway, if things have changed then so be it.)
PS: Do you happen to know the deal wif super these days - Wif my understanding being that it used to be quarantined also.
No one will give a company credit without guarantees from directors, who in this case is Bob Day.
Also laws have evolved where if it can be established that assets were placed in a wifes name specifically to avoid creditors, then the creditors have access to those assets. Some court case established a precedent - I can't quote it but it happened.
Super is still regarded as being quarantined, but sooner or later someone will transfer all their spare cash into their SMSF the day before they are bankrupted, and a court will award against them and it will be all over for super except for regular normal transfers.
You can't get anything nowadays with a directors guarantee.
Commercial Lease? No
Equipment Rent? No
Business Car Loan? No
... Etc
Keep that in mind when you start a business.
However, director guarantees aren't an out of jail card for creditors. You can't get blood from a stone, remember.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours. Those who can, do. Those who can't, teach. "It's an itchy blanket, it's designed to remind you how lucky you are"
No one will give a company credit without guarantees from directors, who in this case is Bob Day.
Also laws have evolved where if it can be established that assets were placed in a wifes name specifically to avoid creditors, then the creditors have access to those assets. Some court case established a precedent - I can't quote it but it happened.
Super is still regarded as being quarantined, but sooner or later someone will transfer all their spare cash into their SMSF the day before they are bankrupted, and a court will award against them and it will be all over for super except for regular normal transfers.
You can still dig a hole in the backyard though.
I don't think I'd be personally comfortable wif holes in tha backyard filled wif gold 'n/or cash.
It still sounds a bit cruel tho (well, ta me anyway): Ya old 'n f***ed after 35 plus years building houses (or wotever); Things go bad; 'N it's thanks for coming; Thanks for playing; Game over; Ya out!
'Course I DO understand tha concept that creditors very genuinely need ta be paid too. (Like I'd not be a happy chappy AT ALL if me banks folded 'n lost me deposits in 'em.)
But anyway, No it doesn't sound like a huge incentive ta start a business - Leastways not one ya've gotta borrow money for.
Like lots of problems, there just don't necessarily seem ta be especially great solutions maybe?
No one will give a company credit without guarantees from directors, who in this case is Bob Day.
At what point do directors guarantees disappear do you know? Obviously, huge companies directors don't give guarantees.
I've been a director of a couple of small charities (a few mil 'turnover') and none of the directors gave guarantees. The usual 'trade creditors' and commercial property leases, but no borrowing as such.
At what point do directors guarantees disappear do you know? Obviously, huge companies directors don't give guarantees.
Until they are cancelled. If the company stopped trading then there would be no further obligations so maybe you wouldn't bother then.
Quote:
I've been a director of a couple of small charities (a few mil 'turnover') and none of the directors gave guarantees. The usual 'trade creditors' and commercial property leases, but no borrowing as such.
It's normal for directors personal guarantees to be sought by any supplier who extends credit. Banks get not only a mortgage or a charge over assets, but also guarantees from all directors.
Listed Public Companies are outside my sphere of experience. I do remember we often got a "Letter of Comfort" from parent companies, and "Letters of credit" can be obtained to cover trade arrangements, but I'm not familiar on a day to day basis.
Take risks - if you win you will become wealthy, if you lose you will become wise
Until they are cancelled. If the company stopped trading then there would be no further obligations so maybe you wouldn't bother then.
It's normal for directors personal guarantees to be sought by any supplier who extends credit. Banks get not only a mortgage or a charge over assets, but also guarantees from all directors.
Listed Public Companies are outside my sphere of experience. I do remember we often got a "Letter of Comfort" from parent companies, and "Letters of credit" can be obtained to cover trade arrangements, but I'm not familiar on a day to day basis.
Quote:
Until they are cancelled. If the company stopped trading then there would be no further obligations so maybe you wouldn't bother then.
The question was about at what size of companies do directors stop offering guarantees - but you've answered that further on. Thanks.
Quote:
It's normal for directors personal guarantees to be sought by any supplier who extends credit.
In one smaller charity (turnover circa $1m) I was director of, I signed cheques, credit applications etc. I simply refused to offer a guarantee and I can't recall trading accounts being refused as a result - but I'm talking small office supply type accounts mostly.
The larger charity was the same, but I never signed cheques, credit applications etc or got involved at that level. So I wouldn't know how often guarantees were saught, but I never gave them.
Real, or perceived, charities with mostly govt funding are a lower credit risk, so that probably has a lot to do with it.
Not like I'm suggesting stripping assets from a business one can obviously see is failing Musty.
Just suggesting that if he'd whacked a bit in tha missus 'n kids names over tha years 'just in case' I'd not blame him - For showing a bit of caution; As opposed ta throwing it ALL back into tha business.
Tho as ya say, if he was a true believer (with a run of 35 odd good years behind him where he'd even weathered tha last recession - Wif that being pretty good going for a builder I'd say) he may well have just bin chucking it all back into tha business. I'm surprised - Wif my understanding being that was one of the reasons for using a company - Namely to quarantine assets in ones own name in the event of a business failure. (But anyway, if things have changed then so be it.)
PS: Do you happen to know the deal wif super these days - Wif my understanding being that it used to be quarantined also.
I can see what you are saying.
But every dog has a slightly different action.
As the game gets finer the actions available become less.
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