In part three of our podcast series on bankruptcy, Claudio Venegas (insolvency lawyer), shares eye-opening insights into how businesses can protect themselves from financial disaster. He also impresses the importance of not planning and some of the consequences of not getting advice at the right time.
Listen to the Full Episode Here:
https://open.spotify.com/episode/1RYqnPsXe0WaWxUCnpEbvS?si=w0OXEOcxRHyS3JJA0f_RGw
The Price of Prevention vs. The Cost of Crisis
"Most people come to us when it's too late," says Claudio, reflecting on the common challenges business owners face. "Eighty to ninety percent of the time, they reach out after everything has already exploded. And then we ask the question: do you have a partnership agreement? No. Shareholders agreement? No. Terms and conditions? No. Oh boy."
It's a scenario Claudio sees too often. SME business owners neglect foundational legal protections like robust contracts and agreements. This leaves them vulnerable for when disputes arise or cash flow dries up. This results often in avoidable lengthy litigation—or worse, insolvency or bankruptcy.
Safeguarding Your Business
"Starting a business is exciting, but it's critical to set things up right from the beginning," Claudio advises. "If you come to us early, we can help you prepare with tailored terms and conditions, partnership agreements, and shareholders agreements. These documents can save you a lot of headaches and provide a resolution much cheaper than going to court."
By working proactively with experienced lawyers, businesses can build resilience against common pitfalls. Claudio stresses the importance of planning ahead: "It's about protecting your interests, so you don't end up in a dire situation later."
The Human Side of Bankruptcy
Bankruptcy is more than just a financial or legal issue—it's deeply personal. Claudio recounts a particularly shocking case where a client was defrauded by a supplier. The client purchased stainless steel but received a shipping container filled with rubbish: "We're talking tires, used toilet seats—anything but stainless steel."
The fraud cost the client not just financially but emotionally as well. Despite winning a judgment against the perpetrator, the client received no compensation due to the supplier declaring bankruptcy. Years later, evidence emerged that the fraudster and their spouse had purchased a property with cash shortly after being discharged from bankruptcy. This led to further legal battles and a hard-fought precedent in the Court of Appeal.
"This case consumed my client's life," says Claudio. "It highlights how unfair the system can feel for creditors."
What Bankruptcy Teaches Us
This episode of Legally Briefed also delves into the broader public policy behind Australia's insolvency laws. Claudio explains, "The law aims to balance fairness with justice. If someone genuinely falls on hard times, bankruptcy provides a clean slate. But when fraud or deliberate deception is involved, the system has carve-outs to ensure accountability."
Claudio's reflections underscore the importance of legal expertise in navigating these issues: "Every case is bespoke, and it's critical to have someone by your side who understands the complexities of the law."
Why You Need Expert Legal Advice
Whether you're starting a new venture or managing a financial crisis, having the right legal advice is essential. As Claudio emphasises, "It's not one size fits all. The work we do is tailored to each client's unique situation.
In most instances getting advice early can save you from far greater costs—financially and emotionally. Often you have more options and certainly less time pressure if you are facing creditors petitions or ATO notices and associated deadlines.
Getting expert advice as a creditor or if you are experiencing financial difficulties is essential to getting the best outcome.
Speak to our insolvency lawyers today if you need bankruptcy advice or help recovering debts.
For expert legal assistance in Melbourne, Sydney, and Australia-wide speak to our team today on 1300 907 335 or complete an online form and we will respond.
https://open.spotify.com/episode/1RYqnPsXe0WaWxUCnpEbvS?si=w0OXEOcxRHyS3JJA0f_RGw
Legally Briefed is a resource for business owners, professionals, and individuals who want to understand their rights and responsibilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
