Latest / Best of Business / Bryan Williams: BWA Insolvency founder says businesses are still closing because of COVID

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Bryan Williams: BWA Insolvency founder says businesses are still closing because of COVID · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 2: Not everyone's reveling in the so called green shoots of
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  Speaker 2: an economic recovery. We've got warnings this morning from the
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  Speaker 2: insolvency folks. More trouble coming next year, they think as well.
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  Speaker 2: Insolvencies are up nearly forty percent on pre COVID levels.
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  Speaker 2: Brian Williams, founder of BWA in Solvency, is with us.
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  Speaker 3: Brian morning, Good morning, Mike, Good morning.
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  Speaker 2: These guys last to fall. So is this like the
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  Speaker 2: job numbers? So we go through the tough days and
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  Speaker 2: at the very end of the worst of times we
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  Speaker 2: get the insolvency. Is that what's happening?
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  Speaker 3: I think this is the after glow. I think this
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  Speaker 3: is the latency that's expected by the downturn and the
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  Speaker 3: economy that we're rising out of. And the pipeline has
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  Speaker 3: got to clear out and it'll take probably through to
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  Speaker 3: mids twenty six before that's all cleared out.
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  Speaker 2: So when you say mid twenty six, we're sitting here
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  Speaker 2: this November morning, what's happening in a business right now
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  Speaker 2: that they're going to fall over in April of next year.
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  Speaker 3: I think they simply run out of gas. And there
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  Speaker 3: is a persistent motivation by directors, and there are shareholding
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  Speaker 3: interests to survive, motivateds to continue, hoping for perhaps if
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  Speaker 3: you're in the retail industry, for future sales across the
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  Speaker 3: next two or three months, that would bring about gross profit,
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  Speaker 3: which would bring about a retirement debt. And if that
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  Speaker 3: doesn't occur, then they just lose grip.
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  Speaker 2: Okay, So be looking at the books right now saying,
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  Speaker 2: look things are typ we're in trouble, but Christmas will
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  Speaker 2: say this, that's sort of what's driving the mood at
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  Speaker 2: the moment.
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  Speaker 3: I think there is that human endeavor to say we
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  Speaker 3: will not succumb, we will continue, And I think that's
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  Speaker 3: reflective of almost every file that comes across my desk.
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  Speaker 3: Has got virtually no assets remaining, and while there are
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  Speaker 3: resources within the control of the directors, they'll continue to
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  Speaker 3: use them for the purposes of continuing to survive.
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  Speaker 2: Well, there's heartbreaking. Who are these companies? Are the big
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  Speaker 2: boys a little bit? You know? Is it mum and dad?
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  Speaker 2: Is it someone who's been around for six months or
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  Speaker 2: twenty seven years or what?
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  Speaker 3: Yeah, mostly they are smaller companies. In the food and
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  Speaker 3: beverage industry, there are people that have just decided to
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  Speaker 3: get out and hang their shingle. The construction industry still
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  Speaker 3: wins the race. It's way up across all of the
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  Speaker 3: other sectors, although that's declined cross this last quarter of
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  Speaker 3: three percent, but profiting in real estate, argument's sake, that's
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  Speaker 3: up ten percent on the last quarter. And there'll be
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  Speaker 3: long standing businesses that just simply have run out of gas,
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  Speaker 3: run out of resources.
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  Speaker 2: How much of it's about the economy, how much of
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  Speaker 2: it's about the economy versus IID coming in and going
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  Speaker 2: we'll need our money, thanks very much.
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  Speaker 3: I think IID is a significant driver. They are a
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  Speaker 3: large part of any balance sheet, and if they are
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  Speaker 3: not going to be settled, then their view the viewpoint
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  Speaker 3: right now as well, if you can't pay, then you
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  Speaker 3: shouldn't exist. And in a sense it's a healthy destruction
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  Speaker 3: that's continuing at the moment, or even constructive destruction where
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  Speaker 3: if you can't survive, if you haven't got the resources,
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  Speaker 3: if you can't generate profits, then you shouldn't be on
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  Speaker 3: the register. You shouldn't exist.
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  Speaker 2: Brian, appreciate you time very much. Brian Williams, bw A
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  Speaker 2: and Salvansy found a famous situation many years ago. Keating said,
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  Speaker 2: this was the recession in Australia. Of course, this was
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  Speaker 2: the recession we needed to have, if you remember that.
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  Speaker 2: And the Deputy Reserve Bank Governor at the time said,
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  Speaker 2: actually this is good because we can go in and
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  Speaker 2: all these businesses that don't exist shouldn't exist, they're going
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  Speaker 2: to go and that's ultimately good for the economy. Not
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  Speaker 2: that that sort of news. If you're in the middle
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  Speaker 2: of it right now, is there any comfort at all?
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