-
- Published: April 22, 2024
- Category: Latest News
When an established Brisbane vehicle repair business was faced with the slashing of its customer base thanks to COVID lockdowns, and then encountered further obstacles that caused financial distress, the director reached out to Jirsch Sutherland for assistance. A Small Business Restructuring plan was put in place to give it the best chance of survival.
Background
The Brisbane-based company is an established specialist auto mechanic and smash repair business. In the early days of the pandemic, between 2020 and early 2021, its operations were impacted by government-mandated lockdowns, which restricted trading capacity. And as the business’s customers were mainly international students and workers, many of whom left Australia during the pandemic, this led to reduced sales. The issues were compounded by labour shortages and skyrocketing labour costs in 2022-2023, further straining the company’s finances.
Debtor payments subsequently lagged, which caused cash flow issues and resulted in bad debt write-offs. However, despite these challenges, the company made no staff lay-offs.
Solution
The company’s reliance on cash flow for expenses compounded financial woes, and lingering legacy debts hindered the company’s profitability, necessitating restructuring. Jirsch Sutherland Partner / Small Business Restructuring Practitioner Melissa Lau reviewed the business and determined an SBR was the best solution to:
- revitalise operations
- ensure tax compliance and supplier relationships
- preserve jobs
- preserve core business functions.
Results
With total debts amounting to approximately $800,000, creditors approved the SBR, which consisted of a $182,000 contribution and an approximate 26-cents in the dollar return to creditors. “This strategy aims to stave off liquidation, securing the company’s future as a leading smash repair and auto mechanic provider in Brisbane,” says Lau. “And a recent sales uptick signals a recovery.”