Insolvency experts expect to be hit by a wave of company collapses from January 1 after temporary relief measures to help businesses through the COVID-19 economic crisis expire, The Australian Financial Review reported. Practitioners in the area have spent the quieter-than-normal period working on existing insolvency matters, catching up on training and helping out in other service lines, according to leaders at three firms in The Australian Financial Review Top 100 Accounting Firms list.
National Australia Bank on Thursday posted a 36.6% fall in annual profit, hurt by higher loan loss provisions for the COVID-19 pandemic, customer and payroll remediation, and higher wages, Reuters reported. Australia’s third largest lender also warned costs would keep rising in the next few years, and asset quality would deteriorate in the pandemic-stressed economy. NAB reported full-year cash earnings of A$3.71 billion ($2.66 billion), compared with a restated figure of A$5.85 billion last year. Analysts polled by Reuters on average expected cash earnings of A$3.82 billion.
Australia Post licensees say their business are now “worthless” after CEO Christine Holgate quit over the Cartier watch scandal, PerthNow reported. Executive director Angela Cramp, who heads the group of 2850 members, said there was “no way back from this” after Australia Post boss Christine Holgate resigned on Monday – just weeks after the Prime Minister bluntly told her if she didn’t wish to stand aside “she should go”. “Australia Post Australia and licensees are all the poorer from this,” Ms Cramp said.
The Australian Financial Security Authority has issued a warning around dodgy insolvency advisers ahead of an anticipated spike of bankruptcies, nestegg reported. The personal insolvency regulator has now launched a public campaign to raise awareness on the prevalence of dodgy insolvency advisers and telltale signs for the public to look out for. The Australian Financial Security Authority’s campaign comes as it is particularly concerned that those experiencing financial stress because of the economic impact of COVID-19 may be easy targets.
Small and medium businesses (SMBs) that are facing insolvency shouldn’t be subject to the same rules as other businesses, the Law Council of Australia said. The peak body of Australia’s legal profession said that Australia should move away from a one-size-fits-all approach under the Corporations Act of 2001, CRN reported. The Law Council said it was supporting Treasury’s draft exposure bill, which provides an alternative regime that allow SMBs to restructure, or transition to liquidation in a more cost-effective way.
Data from CreditorWatch shows that 436 businesses across Australia went into administration in September, which is 11 per cent higher than previously, MacroBusiness reported. The number of businesses going into administration in locked-down Victoria rose by 23.8 per cent, although there was a 1.6 per cent decline in business administrations in New South Wales. CreditorWatch’s chief economist Harley Dale says there is some correlation between the increase in business administrations and the recent reduction in government support measures such as JobKeeper wage subsidy.
In March this year, the Australian Government implemented new measures to assist financially distressed businesses and individuals to navigate the economic impacts of COVID-19, Mondaq reported. As expected, we have seen a drastic downturn in the filing of Wind Up Applications and Creditors' Petitions with the Courts, and the uptake of voluntary administrations. The number of Wind Up Applications filed between July and August 2020, as compared to July and August 2021, are down by 89% and Court Liquidations have also significantly decreased by 74%.
Josh Frydenberg Announces Plans to Overhaul Insolvency Laws In the Wake of COVID – Will It Be Enough to Prevent 50 Operators Forecast From Exiting the Sector?
The Treasurer says he expects the reforms to cover around 76% of businesses facing insolvency today – 98% of whom who have less than 20 employees, The Weekly SOURCE reported. Taking elements from the United States’ Bankruptcy Code, the measures – which have yet to be legislated but will start on 1 January 2021 – will see a shift from the current ‘creditor-in-possession’ regime to a ‘debtor-in-possession’ system.
Australia said on Friday it would simplify bank lending rules to free up credit in a bid to stimulate the economy, which slid into its first recession in nearly 30 years due to the coronavirus pandemic, Reuters reported. Shares of Australia’s “Big Four” banks rallied after the announcement in early trade, with the heavyweight financial sector surging more than 3%. The benchmark index was up more than 1%. National Australia Bank and Westpac Banking rose nearly 6%, while Commonwealth Bank of Australia was up more than 2%. Australia and New Zealand Banking Group rose nearly 5%.
Australia on Thursday unveiled its biggest shakeup in bankruptcy laws in nearly three decades, allowing businesses to trade while insolvent and take more control over debt restructuring, in a bid to help firms through the coronavirus crisis, Reuters reported. Under the proposed rule changes, businesses with liabilities of less than A$1 million ($708,000) will be able to keep operating while they come up with a debt restructuring plan, rather than be placed in the hands of administrators.