ARITA response to ASBFEO COVID-19 Recovery Plan
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has released a 'COVID-19 Recovery Plan'. This plan includes recommendations concerning a range of issues impacting the small business sector including taxation, industrial relations and turnaround and insolvency.
ARITA has reviewed the ASBFEO’s plan, focusing particularly on its recommendations for small and medium enterprise (SME) turnaround and insolvency. From ARITA’s review of the turnaround and insolvency aspects of the ASBFEO plan reflects a poor understanding of important foundational elements of an efficient and effective regime for restructuring, insolvency and turnaround.
ARITA, as the professional body representing Australia’s specialised business rescue experts, has long advocated for changes to Australia’s insolvency regime to ensure it better meets the needs of SME businesses. In particular, in ARITA’s 2014 white paper, ‘A Platform for Recovery’ included specific proposals for micro-restructuring and streamlined liquidation regimes. The latter of which was endorsed by the Productivity Commission in its 2015 report on ‘Business Set Up, Transfer and Closure’.
It is critical that all business rescue and insolvency rules, including those focused on the SME sector, seek to strike an appropriate balance between the interests of impacted stakeholders, including creditors and employees as well as business owners.
The ASBFEO plan appears predicated on the premise that all SMEs inherently deserve to continue and succeed. While we recognise that SMEs play a critical part in the Australian economy, and indeed most of our members operate small businesses themselves, it is not realistic to suggest that all businesses will, or even should, succeed.
The ASBFEO plan again highlights the need for the root and branch reform of our entire corporate and personal insolvency regime that ARITA has called for.
Read ARITA's full response to the ASBFEO plan.