COSBOA congratulates the federal government and the Treasurer Josh Frydenberg on the announcement of changes in insolvency practices that will give small business people greater say in how their stressed business can be restructured and where possible continue to trade. This provides struggling business with more certainty beyond the current temporary provisions and a seamless transition when those arrangements expire on December 31.
Peter Strong, CEO of COSBOA, stated today “this is great news. In short, it is a very welcome development that addresses many of the issues recently highlighted by ASFBEO about current insolvency practices where the business owner has no control over the liquidation process. For decades COSBOA has been pushing for reforms in insolvency so that small business people can have the opportunity and ability to save their business in times of stress. For too long the big landlords and others have preyed upon the self-employed and destroyed businesses that could have traded successfully ‘back into the black’ instead of being divided up among hungry and uncaring creditors.”
COSBOA notes that the ‘debtor in possession’ model will also be good for the smaller creditors and employees who often have no say in process due to the power of the big creditors and the desire of insolvency practitioners to wrap up the process as quickly as possible. There are many, often smaller, insolvency practitioners who will use these changes to help businesses survive and then thrive.
Mr Strong added "this is one of the changes needed in this time of deep crisis. There are many businesses out there who have operated successfully and professionally for many years that now find themselves needing to restructure due to a once in a generation crisis that is not of their own making. This measure demonstrates respect for those business owners, for the jobs of their employees and for the economy overall."
Mr Strong also stated “this does not mean non-viable businesses will continue to operate as a majority of creditors still have to agree on any plan. Our members will work with the government to monitor the implementation of the changes and fine tune the process as needed. Great announcement.”