Business Woman Turning Closed Sign on Door of coffee Shop
Business Woman Turning Closed Sign on Door of coffee Shop

How COVID-19 has stopped businesses collapsing

FEWER Queensland businesses are collapsing into liquidation or administration despite the economy facing its greatest shock in almost 100 years.

New figures from insolvency specialists Rodgers Reidy has revealed the number of Australian companies that went under from April to June was significantly lower than the same time last year.

The number of Queensland company collapses fell from 134 in June 2019 to 104 at the same time this year.

Nationally, winding-up applications were down by 62 per cent, with the Australian Taxation Office filing two applications in April and none in May or June.

Court liquidations are down 54 per cent, voluntary administrations are down 42 per cent and voluntary liquidations are down 27 per cent.

The national figures suggest the government's JobKeeper program, changes to insolvency laws and banks' repayment deferrals have allowed businesses to stay open.

It comes as NAB's monthly business survey revealed business confidence turned positive in June, rebounding from record lows over the previous three months.

While confidence lifted into positive territory, conditions remained negative and well below average, in what could be a sign that there is still some way to go.

NAB's confidence index rose by 21 points to +1 points while the business conditions index rose 17 points to -7 points, its highest level since February.

 

 

"Like last month, the improvement in trading conditions and profitability lines up with our internal NAB data which suggest significant improvement in activity," NAB chief economist Alan Oster said.

"It is important to remember that survey indicators in level terms are still very weak and business is nowhere near back to normal."

The improvement in both confidence and conditions was driven by a lift in trading, profitability and employment over the period.

Brisbane's SM Solvency Partner Brendan Nixon said the company directors he had spoken with remained concerned about the economic outlook.

"Their inquiries are in relation to not so much concerns about when the government's stimulus will come to an end, but the fact they're suddenly faced with what's been a fairly immediate decline in sales," he said.

"They're forecasting on when things will start to improve and they're overly pessimistic.

"They're thinking about liquidation."

Mr Nixon said some directors were considering liquidating their company and then restarting when the economy recovered.

 

 

 

Originally published as How COVID-19 has stopped businesses collapsing


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