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All About Silver - ... the buck stops here ...
Perth Bullion bankrupt. American Heritage Bullion warning re: stop doing business with them.



[Summary: Placed into bankruptcy on 02 Jul 2019]

[NOTE: posts are in reverse chronological order, with the newest posts on the top]

Latest Update: $350 to Get Your Goods

August 4, 2019 2:40PM EST
The Liquidator has issued the 3rd Circular to Creditors.

The good news is that safety deposit box owners, allocated storage owners, and people who placed orders that were already picked can get their metal (by September 30, 2019). The main catch is that there is a $350 "Collection Levy" to get it. The Liquidator was very deceptive; he refers to "the Collection Levy of $350 ... as required in the Orders." However, the Order was very clear that the levy was for "the payment of his costs, expenses and remuneration relating to identifying, preserving and facilitating the return" of the metal, "limited to the amount of $350 per collection". In other words, the court said he could charge up to $350; he says the court said he is required to charge $350.

One drawback is that if for some reason not all the metal is present (e.g. if it has been stolen), you presumably will end up paying the $350 and getting nothing (or only part of what you are owed). Similarly, if you placed an order, you won't know if it was "picked" until after paying the $350 (however, in theory, the Liquidator should contact you if your order has been partially completed).

See updates in the "Classes of Creditors" post below for details on specific categories of creditors.

Classes of Creditors

July 24, 2019 10:45AM EST
The Liquidator has identified 6 classes of creditors: 1. Safety deposit box holders, 2. Online purchases (paid, partially paid) with uncollected goods, 3. Allocated storage, 4. Unallocated storage, 5. Buybacks, and 6. Monies received post appointment.

I am not familiar with the laws in Australia (I have no formal legal training). However, in general, here is what I would expect:

1. Safety deposit box holders. In most or all countries, a safety deposit box is used to store items belonging to the customer. In this case, any contents of the box (assuming you placed it there) should be your property, and returned to you. There are still some assumptions here: first, that the items in the safety deposit box are still there, and second, that the Liquidator is not allowed to sell them (which would seem very unlikely).

UPDATE: In the 3rd Circular, the Liquidator stated that the court allowed safety deposit box customers to remove their goods for a levy of $350.

2. Online purchases (paid, partially paid) with uncollected goods. This is the typical situation in bullion bankruptcies with companies that do not offer storage. Typically, these customers get very little back (pennies on the dollar). However, little is known about the financial situation of Perth Bullion at this point. And if the reported tax bill is avoidable somehow, then they may be in decent financial shape, and able to pay back much of what is owed.

UPDATE: In the 3rd Circular, the Liquidator stated that customers whose orders have been partially or fully "picked" can receive their goods for a levy of $350. It is unclear the percentage of orders that have been picked.

3. Allocated storage. Allocated metal normally refers to metal that the customer purchased, that a company is holding for safekeeping. The customer usually has serial numbers for the bars, and is the legal owner. It is different from a safety deposit box because the company usually controls the metal (they can move it from one location to another, for example), whereas the company cannot open a safety deposit box. Assuming that the metal was not lost or stolen, it should end up being returned. However, the same caveats apply as with safety deposit boxes: this assumes that the bars were not sold (it's easier to illegally sell allocated metal than metal in a safety deposit box), and that the Liquidator is not allowed to sell them.

UPDATE: In the 3rd Circular, the Liquidator stated that allocated customers can receive their goods for a levy of $350, assuming the metal is there.

4. Unallocated storage. Unallocated metal normally refers to an "IOU" where a company owes you metal. There is no specific metal identified as yours. The company may or may not actually have as much metal as they owe customers. In this case, you are normally an unsecured creditor, meaning that you would only get money after higher priority creditors get paid (such as the Liquidator). For example, if they have $10M in customer unallocated accounts, and actually have $10M of metal in their possession, but accumulate $10M of Liquidator fees (which would seem to me to be very, very high), no money would be available for the unallocated customers.

UPDATE: In the 3rd Circular, the Liquidator did not mention unallocated storage.

5. Buybacks. I assume this means people who sent metal to Perth Bullion but have not received payment yet. This gets tricky, as the outcome depends on when the legal title transfers to Perth Bullion (e.g. when they receive the metal, or when they pay for it).

UPDATE: In the 3rd Circular, the Liquidator did not mention buybacks.

6. Monies received post appointment. This should be fairly straightfoward: unless something unusual happens (or the laws are not typical), that money should be returned.

UPDATE: In the 3rd Circular, the Liquidator stated that he expects a refund for these orders.

I do plan to update this section if I get more information, and as I get a better handle on Australian bankruptcy laws.

Documents

July 23, 2019 4:50PM EST
RSM Circular 1 (11 Jul 2019)
RSM Circular 2 (19 Jul 2019)
A copy of the Perth Bullion Safe Deposit Box agreement
A copy of the Perth Bullion Safe Deposit Box FAQ
The May, 2019 order adjourning the hearing to July 2, 2019.

Terms

July 23, 2019
Some of these terms/acronyms will be especially helpful for those not in Australia:

  • ATO - Australian Taxation Office. This is the agency that collects revenue (e.g. taxes) in Australia. This is roughly the equivalent of the IRS in the United States.
  • Bullion Bourse Pty - The company that purportedly owns Perth Bullion.
  • GST - Goods and Services Tax. This is a tax on most goods and services sold in Australia. It is similar to sales tax in the United States. Precious metals are GST-free in Australia. But, not all items we consider precious metals are tax-free: for example, proof coins and rare numismatic items (see the details in GSTR 2003/10).
  • Liquidator - The person responsible for the bankruptcy (more specifically, liquidating the company). This is roughly the equivalent of a Trustee in the U.S. bankruptcy system
  • PB - Perth Bullion.
  • SMSF - Self-managed super funds. Similar to a self-directed IRA in the United States, it is a way to save for retirement where you can control the investments.

Initial Bankruptcy Details

July 23, 2019
As of July 2, 2019, Perth Bullion Company (a/k/a Bullion Bourse Pty Ltd, a/k/a Silver Solar) is officially in bankruptcy, and being liquidated. They are no longer trading (doing business).

The Liquidator (similar to a Trustee in the U.S. bankruptcy system), Neil Cribb of RSM, obtained control of the premises on July 9, 2019. They have a webpage about the bankruptcy.

They have identified 6 specific types of creditors: [1] safety deposit box holders, [2] online purchases that have not yet been delivered, [3] allocated storage customers, [4] unallocated storage customers, [5] buybacks, [6] monies received post appointment.

The Liquidator states that many records are minimal ("not readily available"). This suggests this could be a messy bankruptcy; however, customers were stating that they could log in and view records of their transactions.

It is unclear at this point if any insurance exists, and if so, what it might cover. Perth Bullion stated that their safety deposit boxes included $10,000 of insurance. The Liquidator has said "I recommend you immediately consider arranging your own insurance" -- the meaning of this, however, is unclear. No insurance company will knowingly pay for past acts. Presumably he means that if you have insurance you have paid for, you should start a claim.

If you placed an order by credit card and have not received it, this will likely be considered a "billing error" by your bank, in which case they should be able to reverse the charge.

It seems clear that the company was placed into bankruptcy for not charging GST (tax) on certain bullion items, and they suddenly owed $2M in back taxes. Most likely, they were unable to pay the bill, and the ATO forced them to shut down.

The ATO first took action to shut down Perth Bullion in April, 2019.



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