Business Distress In Face Of Covid-19 Uncertainty
Many businesses, large and small, are facing uncertain trading due to the public health concern growing internationally and, more recently, domestically.
In the past few days, there have already been announcements of businesses scaling back or ceasing operations and standing down workforces.
As an experienced Insolvency Practitioner, I back myself to restructure or turnaround a business provided it has a turnover/revenue.
However, for the immediate future in many industries like hospitality, tourism, retail and other service industries, there is likely to be periods of limited or no revenue.
How do business owners manage through such uncertainty?
How do Directors manage their duties to shareholders and balance the risk of insolvent trading?
The only real answer is there is no one answer and each business will have its own challenges given its industry, financial position and ability to raise working capital.
My first suggestion is to always seek advice early from your Accountant or Solicitor who should then refer you to an experienced Insolvency Practitioner for appropriate advice around the options available to your business.
Some considerations in these uncertain times include:
- Reviewing the business expenditure and slashing unnecessary costs
- More drastic cost-cutting to reduce the fixed costs of the business
- Standing down part or all of the workforce
- Seeking relief from financiers and/or negotiating rent relief
- Negotiating payment arrangements or repayment holidays with statutory bodies
What decisions each business needs or takes will differ but in these unprecedented times, there should be no measures off the table.
It is also important to consider the impact a business closure or failure may have on the owners/Directors and advise around how to manage the fallout from such an event is equally as important.
At PKF in Sydney and Newcastle, we have 30 experienced Business Recovery and Insolvency staff supported by a 240 strong workforce, so no assignment is too big or too small.
For restructuring, turnaround or insolvency advice for either corporate or personal matters, please contact me for a confidential consultation at no cost.