There are 14,000 company insolvencies in Australia each year, taking $13 billion out of the economy. Michael Fingland, managing director of company turnaround specialists Vantage Performance, reckons at least $2 billion of this could be realistically be retained if there was a more proactive approach to seeking help for struggling businesses. Unfortunately pride often gets in the way and managers press on without fixing fundamental problems in the business.
The impact spreads further than the companies themselves — 39 per cent of all registered companies are impacted as creditors of these insolvencies.
These issues can be resolved by early intervention, but for those who leave it too late the Treasury and ASIC are both examining the notion of a safe harbour for businesses that try to work their way out of trouble whilst insolvent. Would a change to the law help more businesses get back on track?