4. Defining Insolvency Terms

Untrustworthy Pre-insolvency Advisors

The first thing to understand is that an Untrustworthy Pre-Insolvency Advisor (UPA) comes in all shapes and sizes. In many instances I have seen good people encouraged to do bad things by a UPA – the video below is an example of a director prepared to take the advice of a UPA when it was obvious that what he was being advised to do was asset stripping and illegal. Not all UPA’s are as blatant as the 2 in the video, and not all schemes or restructuring arrangements will be so obviously illegal. UPA’s are as dangerous as Trustworthy Incompetent Advisors because either way the Director is getting poor advice that ultimately can lead to poor outcomes including as the article and video below shows – significant prison sentences.

Pre-Insolvency Advisors get 5 years

This image has an empty alt attribute; its file name is ABC-Picture.webp

Read the full story here courtesy of ABC News.

https://iview.abc.net.au/video/NC2101H187S00 – 7:30 Report 24 November 2021

Before Richard Ludwig’s company went bust, he and his pre-insolvency advisers smuggled more than $740,000 out of the businesss. Richard Ludwig, of Broadbeach Waters, Queensland, has pleaded guilty to intentionally dealing with the proceeds of crime and 10 counts of breaching his directors’ duties, after engaging in activity that involved illegally removing company assets to prevent creditor access.

Mr Ludwig was charged on 1 March 2019, following an investigation by ASIC (19-047MR).

The Commonwealth Director of Public Prosecutions, was succesful in their action against the pre-insolvency advisors resulting in Stephen O’Neill and John Narramore receiving prison sentences of five and four and a half years respectively for dealing in the proceeds of crime.