Australia Faces Avalanche of Business Failures In September ‘Fiscal Cliff'

Australia faces an avalanche of business failures in its transport and hospitality sectors after government subsidies end in September, insolvency lawyers and economists say, while some argue that so-called ‘zombie’ firms should be allowed to fail, Reuters reported. About 240,000 businesses in tourism and professional services are at high risk of failing during the September ‘fiscal cliff’, when widespread wage subsidies are set to end, economists at Deloitte said on Monday. Despite the pain, it has never been more important to let otherwise ‘zombie’ companies with endemic operational flaws fail, so as to allow capital to flow to productive firms critical to the recovery of the economy, they say. “Money that is just floating around in businesses that aren’t really providing an effective output to the economy is problematic,” said John Winter, the chairman of the Australian Restructuring Insolvency & Turnaround Association. Read more