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The COVID-19 pandemic has been called a ‘once in a hundred years event’.
The Australian government’s response has been to introduce a number of interim measures to provide businesses with breathing space during a time of great uncertainty.
However, as restrictions begin to lift in some parts of the country, businesses, directors and creditors need to be aware of the steps they can take now – before the grants, handouts and deferrals stop (and they will!) – to get their cashflow moving again. And, if there’s a dispute, the most efficient ways to recover outstanding debts.
Moray & Agnew’s Newcastle team offers obligation-free consultations to business owners on cashflow and insolvency related issues. We provide much-needed perspective for businesses to plan the financial year ahead.
The free consultation service is not new – it has been offered by Moray & Agnew for a number of years as part of our commitment to help the communities in which we work and live.
The types of enquiries we regularly receive from clients include issues such as recovering payments, not being able to pay debt, and contract management issues.
A company director’s legal duty includes monitoring the financial position of the business to ensure it can pay its debts when they are due and – just as important – contractors are paying their debts to the business.
It is vitally important to get appropriate advice from a trusted adviser (accountant or lawyer) early if you think you will have difficulty paying your debts on time or when relief measures cease.
Now that Australia is officially in recession, we could expect many companies to enter some form of insolvency. But that’s still not the case.
The government’s COVID-19 stimulus measures appear to be propping up a large number of ‘zombie’ companies that would have otherwise entered insolvency.
Preliminary figures for May 2020 indicate that new insolvency appointments for the month are actually down 36% from the same period in 2019. If confirmed, it will be the slowest May for insolvency appointments since 2000.
ASIC’s weekly insolvency monitor has identified a significant decrease in the number of small business insolvencies in the 12 weeks prior to June 2020.
The hot topic in the insolvency industry is when the ‘wave’ is coming.
If you are a small business that has been affected by a downturn in business due to COVID-19, or you are a creditor because your clients or suppliers are in trouble, it is vital to seek advice as soon as possible from a trusted adviser.
Here are six questions you should ask:
Moray & Agnew’s Newcastle team uses its skills and expertise to help businesses navigate through financial crises and assist them in determining the best solution for their legal issues.
The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.
For further information and assistance on the issues raised in this article please speak to the author, Patrick Kaluski – Partner, or your usual Moray & Agnew contact.