In just 30 days, JobKeeper comes to an end. And national, independent business turnaround and insolvency firm Jirsch Sutherland is urging struggling businesses to act now and seek help – while there’s still time.
“JobKeeper has been a godsend for many businesses and while many no longer need the support, there are still countless others that have been relying on it. Its conclusion may be a trigger for financial distress, as many businesses have exhausted their cash resources and won’t be able to stand on their own two feet and pay staff wages,” says Bradd Morelli, Jirsch Sutherland’s National Managing Partner.
“It’s crucial for business owners and directors to be proactive and to act early if they’re in financial distress. There can be options but it’s important to understand which process is right and know when to use it. There’s a huge difference between early intervention, a controlled process, a reactive process and a forced winding up.”
Morelli says there has been an uptick in enquiries for insolvency services, corresponding with end of the insolvent trading moratorium on December 31 and the further scaling back of JobKeeper on January 1.
“A number of ‘safety nets’ have already been removed and one of the key ones – JobKeeper – ends on March 28. In addition, the temporary restructuring relief, which relates to statutory demands and provides a director of eligible companies with a temporary safe harbour from personal liability for insolvent trading, ends on March 31. There’s now even greater need for directors to be fully aware of all the options and act appropriately.”
Business owners and directors need to do a simple self-assessment and determine whether, post-stimulus, they have the ability to pay staff wages, tax, rent and superannuation. “Put simply, will your business be able to keep its head above water post-stimulus? If the answer is no, then it’s crucial to speak to a trusted adviser like an accountant or business turnaround/insolvency specialist,” Morelli says.
He expects that once businesses that are still on JobKeeper receive their last payments in April, the ATO will start to pursue outstanding debts. “While the ATO has been very quiet for almost 12 months, that won’t last (their debt book is an estimated $53 billion and they want to recoup this). And that’s when we expect to see the insolvency wave building,” he says.
Of recent reforms including the Small Business Restructuring and Simplified Liquidation processes, touted by the federal government as some of Australia’s most significant reforms, Morelli says “they aren’t as simple as they first appear”.
“While they encourage earlier intervention, they come with their own level of complexities,” he adds. “Despite the reforms, the best and most appropriate appointment may still be a traditional appointment. There are various options, so it’s important for business owners to ask for help if unsure. As always, it’s crucial to be proactive and to act early.”
About Jirsch Sutherland – www.jirschsutherland.com.au
Established in 1984, Jirsch Sutherland is one of Australia’s leading national independent insolvency specialists. The Jirsch Sutherland team works closely with small and mid-size accounting, finance and legal firms – and their clients – to provide a wide range of expert corporate and personal insolvency services including liquidations, voluntary administrations, receiverships and bankruptcy.
With head offices in Sydney, Melbourne, Brisbane, Newcastle and Perth, supported by a network of regional offices, Jirsch Sutherland’s national reach combined with a local presence underpins the company’s ongoing success. For over three decades, Jirsch Sutherland has earned a well-deserved reputation for protecting and guiding clients through the insolvency process in a fair and ethical way.
In Western Australia, Jirsch Sutherland trades as WA Insolvency Solutions.
For further information:
0419 401 362