Tuesday, June 30, 2015

The 'Jodee Rich' changes

As set out in earlier posts, and with thanks to the Television Education Network, today’s post addresses the issue of ‘The ‘Jodee Rich' changes’ at the following link - https://www.youtube.com/watch?v=8YzQI7nsYI8

As usual, a transcript of the presentation for those that cannot (or choose not) to view the presentation is below –

The Jodee Rich case related to Mr Rich who was one of the directors of One.Tel.

The allegations were that almost immediately before, that is a matter of days, before it became public knowledge that One.Tel had been insolvently trading, Mr Rich took steps to transfer significant assets out of his name and put them into his spouse's name. He did that using particular provisions under the family law legislation, which at the time actually took priority over the bankruptcy laws. 

As most will know, the bankruptcy legislation allows trustees in bankruptcy to clawback assets that are disposed of immediately before bankruptcy. When Mr Rich did the transfers, the family law rules allowed the bankruptcy rules to be ignored, so the creditors would have been left exposed. 

In the particular factual scenario of Mr Rich's situation, he actually voluntarily agreed to unwind the transfers.  However, the fact that Mr Rich had even tried to do the transfers was enough of a catalyst for the government at the time to bring in amending legislation. 

The law now requires anyone that has both a relationship issue and creditors in play at the same time, for all of those parties to be heard before the same judge and for that judge to then make a decision as to how the assets should be dealt with.