Big bucks buy more for free

It was interesting to read in the Sydney Morning Herald the other day, (“Big Business seen as getting sweeter deals”, SMH 3 Mar 15) that the ATO’s Inspector General’s Report clearly indicates that Big Business definitively appears to get a better deal than smaller businesses when negotiating with the ATO.

To those of us that advise in this space this is not new. I can remember quite a number of years ago dealing with one client that had regrettably overstepped the mark with his funder. Consequently the funder (and their representatives) had made it quite clear that they were intending on proceeding to realise all available security, and then proceed if necessary to bankruptcy of all the guarantors to obtain the benefit of any other assets not covered by formal security as they saw some real value in these (relatively small holdings in art and cars mainly).

At the same time, and whilst not a client, I was very much aware of another budding financial problem involving all up facilities of some $200 Million. In this case the borrower was summoned, advised that the relationship was over, and further told that they had three months to fund a payout of something just over half of the existing debt. All hands washed, leave and do not darken our door in the future. That’s almost a whopping $100 Million write off in one go. If our client had been equally treated then the write off would have been around $500,000, there would have been no realisation costs and receivers fees, and he could have refinanced out of it in less than a week! Regrettably a lot of the need for additional funds was to cover all of the extras incurred in realisation.

When dealing with financial institutions, one can, I suppose, simply argue that its business, if you can’t afford the swim then don’t get into the pond. However these days the benefit of big coffers is increasingly in all aspects: – business, governments as well as the legal system; those with the greater funds will win their equality in the end. Those without will be trodden upon or washed aside.

What will, in my eyes be most interesting is what the ultimate response to this report will be; will it enshrine the fact or will genuine attempts be made to create equality? Let’s keep our eyes and ears open as the answer unfolds.