Extension to Temporary Protections for Financially Distressed Businesses – Is this just delaying the pain?

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Financially Distressed Businesses

As anticipated, the Federal Treasury announced on the 7th of September, that the temporary protections for financially distressed businesses will be extended beyond the initial six month period to 31 December 2020.

Since the introduction of these measures in April 2020, the number of construction industry related insolvencies have decreased by 65%. This is an average of 92 fewer per month.

Jul – Aug 2020 compared to Jul 19 – Aug 19

  • Winding up Applications are down by 89%
  • Court Liquidations are down by 74%
  • Voluntary Administrations are down 62% but after adjusting the figures to record multiple companies in a group as a single appointment
    Administrations are down by 62%
  • Voluntary Liquidations are down 37%.

Potentially by the end of the protection period there could be over 800 zombie businesses that could go into some form of external administration at the end of these temporary protections in early 2021.

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