NSW Credit Law

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Suite 1 15 Liamina Avenue, Woonona NSW 2517
Phone: 02 4206 8951

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Hospitality Hurting

Articles

Hospitality Hurting

INSOLVENCY LAW – HOSPITALITY HURTING

The hospitality sector is an integral part of the Australian economy and includes a diverse range of businesses including hotels, pubs, licensed bars, restaurants, cafes, leisure clubs and venues employing over 900,000 workers across the country.

The forced closure and restrictions placed on restaurants, cafes and other hospitality venues during 2020 has had wide and damaging effects on the sector from which some businesses will not recover.

With over 130,00 businesses in the sector, the market is already highly competitive with technology driving change across the industry and establishments working harder to differentiate their offering from that of competitors.

 

COVID-19

With the industry now facing a rebuild operation, the like of which it has never seen before due to COVID-19, regulatory changes and restrictions, high debt levels and increased competition, business operators can find it hard to remain positive and profitable.

COVID-19 has led to new technologies increasingly challenging the hospitality industry with tech-based food delivery services growing exponentially and placing significant demand on the sector to innovate.

As establishments reopen to a market that has been starved (literally) of its dining out experience, patrons are becoming more discerning, placing particular focus on service quality, atmosphere, food quality and memorable dining experiences.

Restaurants are being forced to innovate, adapt and respond with options to address these changes while pubs are striving to differentiate by providing an alternative to other dining experiences.

HOWEVER, IT IS NOT ALL BAD NEWS

Here at NSW Credit Law, we believe that there will be a significant uplift in demand in the sector once COVID-19 is behind us and there is now light at the end of the tunnel with the virus seemingly under greater control and a vaccine around the corner.

Therefore, it is imperative that businesses should not lose all their staff and supplier relationships. Businesses must continue to balance right sizing measures so they have the right systems, relationships and people to support the predicted rebound.

Unfortunately, we further believe that the government’s recent changes to Job Keeper, Job Seeker and the lifting of the temporary insolvency and bankruptcy debt relief measures is premature and will leave businesses in the hospitality industry struggling at a time when they should be offered more support to get back on their feet, rebuild the industry and drive employment figures.

There is some good news for small business, however. There are now some small business insolvency reforms in force. These are Australia’s largest corporate insolvency reforms in 30 years and they came into effect at the beginning of 2021.

Organisations within the hospitality sector need to familiarise themselves with the information now in light of an anticipated wave of insolvencies in 2021, as COVID-19 related government incentives cease.

Part 5.3B of the Corporations Act 2001 (Cth) establishes a new formal debt restructuring process for eligible small companies to be supervised by Small Business Restructuring Practitioners. This enables financially distressed but viable companies to restructure their existing debts so that they can continue to trade.

There are also new laws with regards to small business liquidation providing a new and simplified liquidation pathway for eligible small companies to allow for a faster and lower cost liquidation process.

NSW Credit Law has developed an in-depth understanding of specific requirements and business operations having assisted clients experiencing financial difficulties across the hospitality sector.

We recognise that specialist knowledge and skills are required when dealing with businesses that are facing financial difficulties, stress or insolvency.

Our clients include restaurants, clubs, cafe’s, pubs and franchisees. Our industry experience has allowed us to develop expert skills and apply them across matters across the sector.

We work collaboratively with business owners to assess their specific financial concerns and individual circumstances.

If you have cashflow issues, creditors beating down your door, credit rating defaults and judgment debt defaults that need amending we can assist you to get back on your feet so that you can take advantage of the predicted an inevitable rebound in the hospitality sector.

We will negotiate on your behalf with your creditors, their solicitors and credit reporting bureaus to help businesses stay afloat during the most challenging time the industry has ever faced.

 

NSW Credit Law provides the following services to assist clients in dealing with creditors:

  • Debt negotiation with your creditors
  • Review of legal proceedings and prospects of defence
  • Defence of legal proceedings
  • Response to bankruptcy proceedings
  • Response to wind-up proceedings
  • Credit rating default reviews
  • Credit rating default updates and removal
  • Credit rating judgment debts set aside
  • Hardship and vulnerability assistance
  • Referral to financial counsellors where necessary
  • Referral to our panel of Small Business Restructuring Practitioners
  • Pro-bono work considered for extreme hardship and vulnerability cases

Contact NSW Credit Law 02 4206 8951 or visit our website and fill in the enquiry form on our free consultation page https://nswcreditlaw.com.au/free-consultation/

References:
SV Partners
KPMG
Minter Ellison

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