‘Crunch time’: 240k businesses face collapse in 50 days
Thousands of businesses still struggling to stay alive should consider closing, with a leading insolvency firm declaring now is "crunch time" for them to survive or die.
Thursday marks 50 days before key government stimulus measures, thought to be supporting thousands of businesses, come to an end.
December 31 will mark the end of the insolvent trading moratorium, the first tranche of JobKeeper 2.0 and the commercial eviction moratorium.
Insolvency firm Jirsch Sutherland said now was the time for directors to see the writing on the wall and warned them they could be liable for damages if they continue to trade while insolvent.
"It's vital that businesses don't ignore the warning signs of insolvency - otherwise they could miss the window to take corrective action," Jirsch Sutherland National Partner Bradd Morelli said.
"It's crucial that business owners and directors understand that while it might not be their fault that their business is in trouble, it is their responsibility."
In July Deloitte Access Economics revealed about 240,000 businesses in the hospitality, professional services and transport industries were at "high risk" of collapsing when federal government support ends.
The Australian Securities and Investments Commission, the corporate watchdog, has urged directors to seek advice about their company's financial situation.
Mr Morelli is expecting a "two waves" of company insolvencies to crash next year.
"While we will see ripples in the March quarter, the first wave of insolvencies is forecast to hit in June and then the second - the predicted tsunami - at the back end of 2021," he said.
"While some vulnerable businesses might currently have cash in the bank, once the government's stimulus measures end, this cash will begin to gradually deplete, particularly as businesses are required to meet their deferred payment obligations, which includes tax and rent."
The Australian Taxation Office and banks have stopped pursuing outstanding debts, however both are expected to ramp up in March next year.
A record $53bn is owed to the ATO and pressure is building on the ATO to claw the debt back.
Nationally, winding up applications have fallen by 94 per cent, court liquidations are down by 93 per cent and voluntary administrations are down by 64 per cent.
Originally published as 'Crunch time': 240k businesses face collapse in 50 days