An insolvency practices inquiry led by Small Business and Family Enterprise Ombudsman Kate Carnell is now at its mid-point with over 300 businesses having come forward with their experiences.
The inquiry was launched in October 2019 to probe whether current insolvency practices achieve the best possible outcome for small and family businesses in trouble.
The printing industry, and many other industries in Australia, is no stranger to insolvency with many businesses large and small heading that way in 2019.
In 2018/19 8,000 businesses entered external administration with 51 per cent of those reporting inadequate cash flow as the key cause of failure, ASIC says.
A discussion paper is now circulating giving business owners and those working in insolvency to share their stories and make suggestions. The discussion paper can be found here and is taking submissions until the end of January 21, 2020.
Carnell says the clear message that has come through so far is the earliest a business in trouble comes forward the better for all involved.
“It’s crucial that small and family businesses experiencing financial difficulties understand they don’t have to go it alone. This is the time to lean on a trusted advisor, like an accountant,” Carnell said.
“Industry professionals have also called for a streamlined insolvency process for small business, with minimal red tape that provides a real option to turn around the profitable parts of the business.
“In releasing this discussion paper, we’ve outlined the key pain points for small businesses as well as the challenges for registered liquidators.”
A discussion paper has been released to give business owners and insolvency practitioners the opportunity to give feedback on the current system. It can be found here with submissions set to close on January 31, 2020.
“More than 300 small businesses have come forward to share their experiences of going through the insolvency process,” Carnell said.
“Many have spoken of being left with nothing – no business, a ruined reputation and often no home and broken families. It’s absolutely gut-wrenching.
“The overwhelming experience of small businesses has been a loss of control, costs that strip the value of a business and a lack of transparency throughout the process.
“We also appreciate the constructive feedback we’ve had from insolvency practitioners, industry groups, lawyers and financial advisors.
“They have sent the clear message that small businesses experiencing financial difficulties are often leaving it too late to seek help.
“What we know is the sooner small and family businesses get help, the more likely it is they can achieve a turnaround or restructure.”
Carnell is due to hand down her final report on the matter in March 2020.
For more information about the inquiry email: [email protected].
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