Small businesses should have better access to ‘debt hibernation’ instead of being made insolvent when they face a crisis beyond their control, so they are better able to pursue a credible restructure, save jobs and rebuild, according to the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson.
It is one of several recommendations made by the Ombudsman to improve Australia’s insolvency laws which are being reviewed for the first time in more than three decades. Mr Billson called for an emphasis on optimising and preserving value in a business instead of asset fire-sales, noting liquidators get paid three times as much to shut down a business as they do to save it. He said it was vital small businesses received more timely advice, written in plain English, and that their trusted advisers were upskilled to better manage business viability and highlight early concerns regarding the solvent nature of a business.
“Small and family businesses have suffered a series of rolling disasters beyond their control such as floods and bushfires and the COVID-19 shutdowns and while governments may offer support, the assistance is not guaranteed, is inconsistent across jurisdictions, varies with each shock and often delays, rather than mitigates, the impacts.”
Mr Billson said establishing a business viability program would make it easier for small business owners to access person-to-person expert business advice and support.
“This would be a viability service to improve businesses’ financial acumen, forward planning skills, and understanding of insolvency processes. It would also provide an opportunity to identify cash flow or other problems early and provide tools to remedy them, such as through restructuring, which may avoid an insolvency,” he said.
