The ABS surveyed businesses during the week of July 15-23 reporting that 10% (220,000 businesses) that they would close when government financial support ended**.
The US Federal Reserve Chairman, Jerome Powell remarked in May 2020*** that “Avoidable household and business insolvencies can weigh on growth for years to come. Long stretches of unemployment can damage or end workers’ careers as their skills lose value and professional networks dry up, and leave families in greater debt.4 The loss of thousands of small- and medium-sized businesses across the country would destroy the life’s work and family legacy of many business and community leaders and limit the strength of the recovery when it comes. These businesses are a principal source of job creation—something we will sorely need as people seek to return to work”
It is the view of Small Business Australia that personal insolvency or bankruptcy caused by the public health crisis response should not be subject to the existing Australian insolvency and bankruptcy laws and regulations. While some temporary measures have delayed the onset of the ability of creditors to trigger debt recovery actions, these changes to policy provide only limited protection and little peace of mind to small business owners.
In survey’s conducted by News Corporation’s online publications, by Small Business Australia and by ACA Research, over 80% of surveyed business owners want the protection of their businesses, their personal finances and reputations through a form of COVID Business Closure.
A COVID Business Closure is NOT equivalent to the existing legal insolvency or bankruptcy approach and can be simply implemented by the Federal Government. A COVID Business Closure would facilitate a fair and rapid finalisation of an existing business, in circumstances where the owner and creditors share the financial pain, with and the owner when ready in the future being able to get started in business again without the legal and emotional costs of being made legally bankrupt.