Recently, “corporate insolvencies (including administrations, restructuring and liquidation) have increased by 62% from 4,912 cases in 2021–22 to 7,942 cases in 2022–23. These volumes exceed the pre-COVID-19 average by 3%.” (statistics taken from the “State of the Personal Insolvency System Report” https://www.afsa.gov.au/about-us/statistics/state-personal-insolvency-report)
Industries such as food services and construction are particularly vulnerable, with rising living costs and interest rates impacting businesses’ ability to meet their debt obligations.
The Australian Financial Securities Authority who manages the application of bankruptcy and personal property securities laws reports that “Business-related personal insolvencies contribute over two-thirds of total system debt ($9.6 billion). The average debt for a business-related personal insolvency is $905,708 — over 6.6 times greater than the average debt for a non-business-related personal insolvency ($136,926).” (State of the Personal Insolvency System Report – https://www.afsa.gov.au/about-us/statistics/state-personal-insolvency-report)
In our view, where a company is wound up, it is often a ‘lose-lose’ situation for all concerned. For the business owner, the business closes and the business assets are sold, and the process is largely out of the business owner’s control. Unsecured creditors fare badly as well.
Is there a different way of approaching the financial difficulties that businesses face in this difficult climate? Is there an approach where the assets of a business are not necessarily sold, and the unsecured creditors may receive more cents on the dollar?
Business Debt Rescue has an alternative, holistic solution for businesses in trouble. Our debt relief solution aims to achieve any or all of the following outcomes for businesses:
· Negotiating with creditors for reductions and waivers in debts based on the current business circumstances.
· Negotiating with creditors to reduce or suspend payments on interest.
· Negotiating creditor payment plans within your estimated budget to make paying back business debts manageable over time.
· Where successful, avoiding a 5-year black mark on a business credit file in contrast to the outcome of insolvency.
· Where successful, avoiding a black mark on a director’s credit file for 10 years in contrast to the outcome of insolvency.
· Minimising contact between the client and the creditors where possible.
· a holistic business debt relief solution that is an alternative to immediate insolvency.
Though the economic terrain may seem daunting for an at-risk business, by providing clients with specialised expertise we may help guide you through your difficulties by offering tailored solutions.
