What Strata Records Won't Show You

July 10, 2020 Edward Dever

Brief overview on what to look for when examining strata records - What to look for when reviewing strata records.

Reviewing fund balances is important. However, much can be learnt from reading Meeting minutes. You will get a sense of the issues within the complex. Many strata reports do not go to this level of detail. However, some strata records are accessible online

Beyond strata records, an experienced property inspection person is essential. Many headaches can be avoided with a detailed inspection. Often the report allows you to reframe an offer to take into account the issues the report raises.

Some issues reports will not reveal.

I have seen instances where the vendor company has been struck off by ASIC, complicating a transfer. In both cases, the investment did not proceed for other reasons so dealing with an asset effectively vested in ASIC did not have to be resolved.

One odd experience was an apartment purchase where the neighbour suffered mental health issues. He had forced a next door neighbour to sell after throwing their newspaper on their roof for months. It became apparent that no tenant would stay beyond an initial six month tenancy. The issue was ultimately solved by finding the right tenant and seven years of peaceful tenancies ensued.

The strangest aspect of that example was that the tenant who moved in and lived there quietly for seven years was from another apartment in the complex. The neighbour had past disagreements with him but, when he moved in next door to him, became quite friendly with him and they actually shared the daily newspaper for many years. (Probably a lesson for the person who lived in the house next door who ultimately sold up and left.)

There are, of course, procedures for resolving disputes between apartment owners. But there seemed little point in pursuing this route given the difficulties of proving that the other owner was responsible for tenants not renewing leases and he was unlikely to attend any mediation process or adhere to any agreement. Better to find a tenant who could deal with the situation.

Sometimes the practical solution is more effective than the legal solution.

July 2020

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Thai Airways Works On Easier Option For Ticket Holders Who Requested Refunds

June 26, 2020 Edward Dever

Thai Airways has indicated that it is trying to create a solution to the prospect of over 300,000 ticket holders who have requested refunds needing to file debt repayment claims in Bangkok.

The Thai Bankruptcy Act provides that creditors are required to file claims within one month of publication of the planner's appointment in the Government Gazette. Failure to file a claim generally means all rights are lost.

THAI has apparently discussed this issue with the proposed planner and expects to announce its approach once the planner is appointed, expected in August.

Hopefully good news for THAI customers who have requested refunds, particularly those based outside Thailand who faced the prospect of needing to file claims with the Bankruptcy Court in Bangkok as well as have their documentation appropriately notarised and legalised.

THAI has also clarified that Royal Orchid Plus frequent flyer members with points balances do not need to file debt repayment claims in relation to their points. Also, ticket holders whose tickets remain unused do not need to file claims. Tickets remain valid for use in the future.

Clarification regarding the notification of the Central Bankruptcy Court, Thailand (THAI Business Reorganization)

June 2020

Landlord Protection Insurance - Market Starts to Reopen

June 16, 2020 Edward Dever

Two months ago, as Covid-19 related restrictions resulted in job losses and a potential crisis among tenants and landlords, insurance companies suspended issuing new landlord protection policies.

The suspension was a reaction to the likelihood of significant evictions and claims under tenant default provisions of policies. The Government freeze on evictions and other support measures helped minimise the risk of claims.

In welcome news for residential property landlords, some insurance companies are starting to recommence issuing these policies. This allows for some price shopping on renewals. However, new policies are not currently being offered with optional tenant default cover nor, in some cases, cover for theft or malicious damage by tenants.

Among the Suncorp Group, AAMI continues to offer new policies. Suncorp and Terri Scheer policies are still suspended as are policies of Australian Landlord Insurance. Coles Insurance (backed by IAG) has recommenced issuing policies as have companies such as EBM RentCover and Allianz.

Examples:

AAMI Suncorp Terri Scheer Australian Landlord Insurance Coles Insurance

EBM Rent Cover Allianz SGUA

June 2020

Covid-19 and Landlords Practising the Art of Cautious Optimism

June 13, 2020 Edward Dever

Many landlords have been practising the art of cautious optimism for the past few months - crossing their fingers and hoping for the best.

Since the COVID-19 restrictions commenced, residential property landlords have been through three end-of-month payment cycles. Sufficient time to judge the impact of COVID-19.

The impact on landlords would obviously vary depending on the exposure of their tenant mix to industries most affected by shutdowns. Landlords with a tenant mix skewed towards, e.g., healthcare workers and pensioners, would be faring better than those skewed towards hospitality workers.

The current staged reductions of restrictions is no guarantee future problems will not emerge with tenancies. A resurgence in COVID-19 cases and the ultimate withdrawal of support measures such as JobKeeper payments are factors which could still impact residential tenancies. Tenants who have so far resisted requesting assistance may ultimately make requests if their employment prospects do not improve.

It remains unclear whether the Qld land tax rebate will be extended beyond 30 June. For those eligible for this rebate, it is conceivable that circumstances allowing them to access the rebate could arise only after 30 June.

Coronavirus, a recession and renters not paying up — here's why some landlords are struggling right now

June 2020

Waivers in a Covid-19 World

June 13, 2020 Edward Dever

POTUS election rallies in the US have added a Covid-19 specific waiver to the terms. Attendees agree to assume all risks relating to exposure to Covid-19.

Will this become standard for public events in a Covid-19 world?

Ticket conditions for public events don't usually contain specific waivers for illnesses such as flu or measles. But I expect this may become more widely used at least until a vaccine becomes available or Covid-19 disappears.

A couple of examples of existing Australian event terms:

Ticketek - may be updated once events recommence.

Fastrack V8 Race Experience - added because they have apparently recommenced operations with appropriate health measures in place.

Link for the POTUS events .

June 2020

Will THAI's ticket holder refund nightmare end?

June 9, 2020 Edward Dever

It took several days following THAI's rehabilitation filing for queries about the fate of ticket holders and for Sections 90/12(9) and 90/27 of the Thai Bankruptcy Act to surface.

Section 90/12(9) freezes all debt payments other than those in the ordinary course of business from the date the Court accepts the petition, with these amounts included as part of the plan voted on by creditors. Section 90/27 deals with applications for repayment of debt in rehabilitation proceedings.

THAI should have been out in front of this issue as the loyalty of its customers is key to its survival. Instead, some media reported that THAI hoped to return the money within 6 months. Others reported sources within THAI saying that ticket refunds may never be made.

Contrast this with LATAM Airlines' dedicated website and clear details for ticket holders - LATAM website

THAI estimates it owes Bt 24b (A$1.1b) to ticket holders. It is not clear how these amounts will be treated. Ticket holders who have requested refunds are likely to be considered creditors who must file claims or lose their rights. Those holding advance tickets or vouchers for future travel may be considered ordinary course of business and not need to file claims.

However, it is not yet clear and ticket holders remain in the dark.

Group demands help for troubled THAI customers

THAI ticket refunds at risk under rehab

THAI claims it owes Bt24 billion in unused tickets

Thai Airways says it cannot honour ticket refunds for now, possibly forever

UPDATE: THAI has released a proposed restructuring timeline.

It is odd that they haven't included the deadline for creditor claims in this timeline.

Meanwhile, THAI has apparently approached courts in Switzerland, Germany and Japan to prevent the seizure of aircraft. US is apparently next on the list.

It is hard to know how aggressive aircraft lessors are at the moment but, given CovId19 issues, it would be surprising if they wanted yet more repossessed aircraft to deal with and store. Also, isn't most of THAI's international fleet grounded in Bangkok? Apart from the odd international repatriation flight.

And more comments indicating ticket holders may have to wait up to a year for refunds.

THAI swoops to protect planes from seizure

Thai Airways: Passengers who require a refund for the ticket must wait until the rehabilitation plan is completed in 1 year. (Thai)

THAI rehabilitation may take up to 7 years: legal advisor

June 2020

Qld's RTA - Reporting On COVID-19 Dispute Resolution Requests Is Wrong

June 7, 2020 Edward Dever

Qld's Residential Tenancies Authority has taken issue with claims in the media that there are 30,000 Covid-19 related requests for dispute resolution.

Either in search of clicks or lazy journalism, the article got the figures completely wrong.

While the RTA Covid-19 Hotline has handled 28,042 phone calls since late March, there have only been 1,281 conciliated disputes, with 80% resolved.

The RTA’s conciliation data does not indicate that tenants and landlords are “going to war” as the article states. Rather, where Covid-19 related issues have arisen, the parties are negotiating in a reasonable manner.

The total number of phone calls comprises calls by all parties, not just tenants. As one real estate agent has indicated, they have rung the Hotline multiple times to clarify various issues.

As the RTA states: “The RTA thanks the Queensland renting community for doing their absolute best to work cooperatively and constructively together during these challenging times."

RTA responds: COVID-19 dispute resolution data article

June 2020

Qld Land Tax Covid-19 Relief - How Does It Work?

June 1, 2020 Edward Dever

Qld landholders who pay land tax may be entitled to relief if a tenant's ability to pay normal rent is affected by Covid-19 or you cannot rent the property for the same reason.

If tenanted, you need to provide rent relief to the tenant for at least the rebate amount. For vacant properties, you may apply the relief towards financial obligations. In each case, you must comply with these leasing principles. https://bit.ly/3ck3w1t

You need to access your online OSR account to apply for the rebate. Fortunately, the OSR's online system has resolved the bugs that plagued this system in late 2019.

The relief relates to the property nominated. For multi-dwelling buildings (i.e non-strata-titled), the relief applies to all units, not just the one affected.

The rebate is restricted to 25% of the 2019 land tax liability for that property. It is not a cash bonanza but can cover a rent reduction for a number of weeks.

As you are self-certifying that you meet the requirements, expect the OSR to subsequently audit claims to ensure compliance.

The deadline for applications is 30 June 2020. Without an extension, landholders only impacted by Covid-19 issues after that date may be adversely affected.

To obtain the rebate, you need to add your bank account details to your online OSR account. By doing so, you agree that the OSR may direct debit any future liabilities and, once added, you can't directly delete your bank account details. You need to adjust the end date for those details so they lapse before the next land tax notice is issued. You can them avail yourself of all payment options.

https://bit.ly/3gF99dO

June 2020

Thai Airways Enters Rehabilitation

May 27, 2020 Edward Dever

But is it Ch. 3/1, Ch. 11 or Ch. 15?

Interesting commentary on the use of US bankruptcy proceedings by foreign companies.
https://bit.ly/2XwthpN

THAI has now filed a rehabilitation petition with the Central Bankruptcy Court in Bangkok with a hearing scheduled for 27 May.
https://bit.ly/3d5LmBx

The Thai Government has indicated it may use both US and Thai proceedings for THAI.
https://bit.ly/3d4xR5j

Foreign companies can, in certain circumstances, file in the US. LATAM Airlines, Latin America's largest airline, filed for Ch. 11 bankruptcy in the US on 26 May.
https://bit.ly/3gnVUya

Filing in the US by THAI would be a defensive move to protect against asset seizures outside Thailand. It seems that the primary filing will occur in Thailand with ancillary proceedings (if needed) brought in the US under Ch. 15

Given the added complexity of dual filings, query whether a form of standstill agreement with the aircraft lessors and other foreign creditors would effectively deal with any offshore seizure risk. This is the approach adopted by the Virgin Australia administrators.
https://bit.ly/2ZEzbbg

UPDATE: The Central Bankruptcy Court issued an order on 27 May accepting a petition for business rehabilitation of Thai Airways International PCL and has scheduled an investigation on 17 August 2020 at 9:00am

May 2020

What Next For Thai Airways?

May 21, 2020 Edward Dever

Rumours circulated in Thailand earlier this week that Thai Airways would file for bankruptcy.

This claim was denied by THAI which is preparing a rehabilitation plan for Government approval. More likely is that THAI may enter formal rehabilitation proceedings under the Thai Bankruptcy Act

Prior to 1998, liquidation was the only option under the Bankruptcy Act. Proceedings involving large companies were about as rare as a black kookaburra. In 1998, Chapter 3/1 was added providing a form of rehabilitation proceedings similar to US Chapter 11.

It was subsequently confirmed that THAI will enter formal rehabilitation proceedings under the Thai Bankruptcy Act following Cabinet approval.

This will be the highest profile case through the rehabilitation proceedings introduced in 1998 and certainly the largest case since the Asian Economic Crisis.

From the media reports, it seems that the Ministry of Finance will reduce its majority shareholding as part of the restructuring although this could just be shifted to another Government fund. THAI will no longer be a considered a State Owned Enterprise with the employees' union to be disbanded. It is not clear how THAI will be funded during the rehabilitation.

It also not clear how existing ticket holders will be treated.

Under the Thai Bankruptcy Act, all amounts owed at the date of the rehabilitation order, are normally quarantined and creditors must file claims for these amounts.

Don't discount authorities coming up with a solution which treats ticket holders fairly that doesn't strictly comply with the Bankruptcy Act.

THAI carried around 19.4m passengers in 2019 which is an indicator of the complexity of dealing with ticket holder creditor claims.

THAI - Cabinet gives nod to THAI rehab
https://lnkd.in/gsjk2EP

May 2020