Blog courtesy of RSM Australia
A calm approach to crisis: develop smart plans for hibernation
The past couple of months have certainly been a rollercoaster as we adjust to a new way of working and evaluate the effect that our national response to the health crisis will have on our livelihoods.
But as fear and panic pervade, it’s never been more important to STOP. Take a breath. Re-assess.
It’s time for practical plans and considered strategies that minimise risk and maximise opportunity.
Avoid rash decisions
Opportunists who capitalise on fear and uncertainty run rampant during a crisis. This is certainly the case right now, so be wary and work closely with your existing advisers.
Going into unnecessary debt or jumping into liquidation or bankruptcy, without a thorough consideration of other options, should not be your immediate decision.
Instead seek calm, experienced, supportive and collaborative advice to help you develop realistic plans that will see you through the foreseeable future and position you and your business for better times ahead.
Limit risk and implement hibernation strategies
As a first step, determine informal and practical solutions that will help you limit your risk and exposure whilst positioning for the future.
Our Federal and respective State Governments, industry and the banks have been commendably proactive, with unprecedented stimulus and other measures on offer with more to come.
Business hibernation and insolvency options
If the stimulus and hardship relief measures are insufficient and your exposure is high, there are other avenues available including:
-Debt and contract negotiation: Negotiate revised and delayed payment terms and other arrangements with landlords, suppliers, banks, employees, the ATO, financiers and so on.
-Alternative dispute resolution and restructuring.
-Risk and insurance reviews.
-Succession and asset protection reviews.
-Safe Harbour Protection: Develop a turnaround plan with a qualified restructuring adviser.
-Holding Deed of Company Arrangement or informal corporate arrangements: –
-Personal insolvency agreements both formal and informal.
The following urgent regulatory changes to the insolvency laws are also welcomed:
-Threshold for creditors to issue statutory demands increased from $2k to $20k
-Directors now have 6 months (instead of 21 days) to respond
-Reprieve for directors from personal liability if trading while insolvent
-Relief for directors from certain obligations under the Corporations Act 2001
Position yourself for recovery
Once you have a plan to manage your exposure during the crisis, it’s important to plan for how you will return to business as usual after the situation eases.
Although it may be difficult to see beyond the next few months, it will pass. And the same enthusiasm and vigour you harnessed to launch your career or business may be needed to re-establish operations successfully.
Stay in contact with specialists that you trust, and don’t be afraid to seek counselling or other avenues of support if you want to talk to someone.
We will continue to provide restructuring and recovery solutions during these uncertain times and are available over the phone and via Skype/Zoom.
We’re also offering free initial consultations with a qualified restructuring adviser, and can help you:
-understand the measures and how they apply to you and your business
-complete hardship applications
-assess your cash flow
-take control of your debt
-devise practical strategies
-develop a turnaround plan
If you would like to know more than please contact:
55 Berry Street Wagga NSW 2650
(02) 6937 7001