Kate Carnell, The Australian Small Business and Family Enterprise Ombudsman, last month announced an inquiry into insolvency practices in a bid to look at the transparency and fairness of the current system.
It’s early days but already a flood of submissions have been received.
The Inquiry, according to Ms Carnell, “will shine a light on the insolvency system and uncover if it encourages practitioners, in the first instance, to restructure the small or family business to turn it around.”
“We know there is a very low success rate in restructuring Australian businesses under external administration, she says, and the impact of the insolvency process is often devastating for the small business owner.
“Few small businesses that enter formal insolvency administration are able to navigate their way through the process to reach a restructuring agreement.”
The inquiry seems to be pointing the finger at insolvency practitioners, when in our opinion there should be more encouragement to engage an insolvency practitioner at the earliest possible opportunity, which is the key to a successful restructure.
At Gartree Thomson Lawyers we understand the need for SMEs to get advice as soon as the company is, or projected to be, struggling financially. We may be able to renegotiate agreements and payment plans to allow the company to survive before any intervention by an insolvency practitioner is needed. The company at risk will also need guidance to minimise personal risk from any director guarantees.
Call us on 02 9922 4111 to find out more.