FINANCE TED TABET WED 23 SEP 20
Current relief in the form of commercial leasing rules and creditor limitations for debtors has created an artificial environment that keeps failing companies alive, credit agency CreditorWatch says.
According to data from CreditorWatch, voluntary administrations across the country have fallen sharply compared to the same time last year with many businesses insulated by temporary insolvency protections.
Court wind-ups in July are now 73 per cent below where they were in the previous corresponding period.
Creditor wind-ups are 47 per cent lower and voluntary administrations are 60 per cent lower, resulting in up to 1,000 Australian businesses now relying on government support to stay afloat.
In March, at the onset of the pandemic, the federal government moved to temporarily suspend Australia’s Insolvency Laws under the Coronavirus Economic Response Package Omnibus Act 2020, with an initial expiration date of 25 September 2020.
Earlier this month, an extension was granted until 31 December 2020 in a bid to prevent further job losses and avoid another massive hit to the economy.
Relief for directors from personal liability when a company is trading while insolvent will also be maintained until that date.
Average number of days payments overdue by industry..