Club Turnaround Strategy Cash flow is a critical element for all clubs Cash flow is a critical element for all clubs Generally in a club the first thing that is not paid is the Australian Taxation Office or a builder for unpaid work Generally in a club the first thing that is not paid is the Australian Taxation Office or a builder for unpaid work Breweries and food suppliers are usually paid. The sharks that usually circle are statutory authorities Breweries and food suppliers are usually paid. The sharks that usually circle are statutory authorities

Can a club be turned around? Fast Turnaround in 2010 is not commonplace Fast Turnaround in 2010 is not commonplace –Difficulty in raising finance –Declining market demand The causes which underlie the clubs problems also need to be understood: lack of investment, excessive debt, inefficiency The causes which underlie the clubs problems also need to be understood: lack of investment, excessive debt, inefficiency BUT if BUT if

Its not too late With early intervention business can be saved With early intervention business can be saved Some examples Some examples BUT IF YOUR TOO LATE BUT IF YOUR TOO LATE –ITS TOO LATE...some examples

Options 2 Paths 2 Paths – if solvent your owned managed process –If insolvent a deed of company arrangement

Responsibilities Chapter 2D of the Corporations Act - Commencing at Section 180 Deals with the officers and employees and contains some of the most significant duties of directors, secretaries, other officers and employees. Deals with the officers and employees and contains some of the most significant duties of directors, secretaries, other officers and employees. Section 180(1) - Care and Diligence States directors must exercise their powers and discharge their duties with the degree of care and diligence that a “reasonable person” would exercise in the corporation’s circumstances. States directors must exercise their powers and discharge their duties with the degree of care and diligence that a “reasonable person” would exercise in the corporation’s circumstances.

Decision Making Section 180(2) - Business Judgement Rule In making that judgement they have: In making that judgement they have: 1. Made the judgement in good faith and for proper purpose; 2. Do not have a material personal interest in the subject matter of the judgement; 3. Informed themselves to the extent reasonably appropriate; 4. Rationally believe that the decision is in the best interests of the corporation

Solvency Section 588G – Solvency The directors of a corporation also have an obligation to ensure that the corporation does not trade in circumstances where it is unable to pay its debts as and when they fall due. The directors of a corporation also have an obligation to ensure that the corporation does not trade in circumstances where it is unable to pay its debts as and when they fall due. Personal liability has long been referred to as the ultimate for sanction for directors. Personal liability has long been referred to as the ultimate for sanction for directors. Given the increasingly litigious times in which we live it is only a matter of time before this occurs. Given the increasingly litigious times in which we live it is only a matter of time before this occurs.

Solvency Definition of Solvency given in Section 95 of the Corporations Act Definition of Solvency given in Section 95 of the Corporations Act Solvency is the ability to pay debts as and when they fall due. Solvency is the ability to pay debts as and when they fall due. If you are not solvent you are insolvent If you are not solvent you are insolvent

Other Obligations Taxation Legislation Directors and officers also have significant obligation through the broad-spectrum of tax related legislation. Directors and officers also have significant obligation through the broad-spectrum of tax related legislation. A recent significant event has occurred where a New South Wales registered club which has gone into liquidation and which failed to forward GST collected by it to the ATO. The ATO had issued the appropriate notices under section 222AOE of the Act, the directors have become jointly and severally liable for the unremitted tax and will see each director paying approximately $50,000 to the ATO. A recent significant event has occurred where a New South Wales registered club which has gone into liquidation and which failed to forward GST collected by it to the ATO. The ATO had issued the appropriate notices under section 222AOE of the Act, the directors have become jointly and severally liable for the unremitted tax and will see each director paying approximately $50,000 to the ATO.