News that Rene Rivkin’s estate has gone into bankruptcy after it was revealed his estate had only $1.1m in assets with around $39m in liabilities has aroused suspicion about what has happened to all his conspicuous assets.

$30m of the liabilities relates to a $30m tax bill from the Australian Taxation Office for his Swiss investment and banking activities. Sydney accountant Anthony Warner last week was appointed as bankruptcy trustee by the Federal Magistrates Court.

Warner has said he will complete a thorough examination of Rivkin’s financial affairs. No doubt he will utilise some of the strong provisions under the Bankruptcy Act as part of his examination into Rivkin’s asset protection strategy. The Act allows the Trustee to challenge certain prebankruptcy transactions and, if successful, to have the transactions set aside and then to recover money and property disposed of by the bankrupt prior to the bankruptcy.

If the bankrupt has undervalued transactions and transfers to a family company trust or superannuation fund in order to defeat creditors, they could be caught. The Act provides that a transfer made by a person who later becomes a bankrupt with a view to defeating creditors is void irrespective of when the disposition is
made.

The Trustee must prove that the main purpose in making the transfer was to avoid the transferred property becoming available to his or her creditors or to hinder or delay the process of making the property available to creditors.

This is so even if the person proves they were solvent at the time and had no creditors at that time. Also a trustee is permitted to set aside a disposition of property made prior to bankruptcy where it was made with the intent to defraud creditors. Such transfers of property were formally known as fraudulent dispositions.

And what the hell is the Tax Office doing? If it had Rivkin under investigation why didn’t it apply to the court for a Mareva Injunction? A creditor has a right to commence proceedings; and if the creditor has evidence that the debtor is disposing of assets so as to prevent recovery of the Judgment Debt once it is obtained, then the creditor can apply to the Court for a “Mareva” injunction to restrain the debtor from dealing with their assets.

Looks like someone has fallen asleep at the wheel again in the ATO as the Mareva would have prevented the transfer of Rivkin’s assets until he paid his big tax bill.

This is not tax rocket science; it’s straight out of the auditors’ handbook! Serious questions now have to be asked by the Minister responsible for the ATO, Peter Dutton, as to how another rich guy outsmarted the Tax Commissioner.