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

Many businesses that limped through the pandemic are now going under.

Insolvency practitioners have been reporting a sharp rise in the number of insolvencies since mid-2022.

Smaller retail, hospitality, construction, transport and manufacturing operators are failing far more now,  than they were before the pandemic.

BWA Insolvency Founder Bryan Williams told Mike Hosking that many have burned through assets to survive.

He says almost every file that comes across his desk is a business that has almost no assets remaining, and has been using all its assets to survive.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
Not everyone's reveling in the so called green shoots of
an economic recovery. We've got warnings this morning from the
insolvency folks. More trouble coming next year, they think as well.
Insolvencies are up nearly forty percent on pre COVID levels.
Brian Williams, founder of BWA in Solvency, is with us.

Speaker 3 (00:30):
Brian morning, Good morning, Mike, Good morning.

Speaker 2 (00:34):
These guys last to fall. So is this like the
job numbers? So we go through the tough days and
at the very end of the worst of times we
get the insolvency. Is that what's happening?

Speaker 3 (00:44):
I think this is the after glow. I think this
is the latency that's expected by the downturn and the
economy that we're rising out of. And the pipeline has
got to clear out and it'll take probably through to
mids twenty six before that's all cleared out.

Speaker 2 (01:00):
So when you say mid twenty six, we're sitting here
this November morning, what's happening in a business right now
that they're going to fall over in April of next year.

Speaker 3 (01:12):
I think they simply run out of gas. And there
is a persistent motivation by directors, and there are shareholding
interests to survive, motivateds to continue, hoping for perhaps if
you're in the retail industry, for future sales across the
next two or three months, that would bring about gross profit,

(01:32):
which would bring about a retirement debt. And if that
doesn't occur, then they just lose grip.

Speaker 2 (01:38):
Okay, So be looking at the books right now saying,
look things are typ we're in trouble, but Christmas will
say this, that's sort of what's driving the mood at
the moment.

Speaker 3 (01:47):
I think there is that human endeavor to say we
will not succumb, we will continue, And I think that's
reflective of almost every file that comes across my desk.
Has got virtually no assets remaining, and while there are
resources within the control of the directors, they'll continue to
use them for the purposes of continuing to survive.

Speaker 2 (02:08):
Well, there's heartbreaking. Who are these companies? Are the big
boys a little bit? You know? Is it mum and dad?
Is it someone who's been around for six months or
twenty seven years or what?

Speaker 3 (02:17):
Yeah, mostly they are smaller companies. In the food and
beverage industry, there are people that have just decided to
get out and hang their shingle. The construction industry still
wins the race. It's way up across all of the
other sectors, although that's declined cross this last quarter of

(02:37):
three percent, but profiting in real estate, argument's sake, that's
up ten percent on the last quarter. And there'll be
long standing businesses that just simply have run out of gas,
run out of resources.

Speaker 2 (02:51):
How much of it's about the economy, how much of
it's about the economy versus IID coming in and going
we'll need our money, thanks very much.

Speaker 3 (02:58):
I think IID is a significant driver. They are a
large part of any balance sheet, and if they are
not going to be settled, then their view the viewpoint
right now as well, if you can't pay, then you
shouldn't exist. And in a sense it's a healthy destruction
that's continuing at the moment, or even constructive destruction where

(03:21):
if you can't survive, if you haven't got the resources,
if you can't generate profits, then you shouldn't be on
the register. You shouldn't exist.

Speaker 2 (03:28):
Brian, appreciate you time very much. Brian Williams, bw A
and Salvansy found a famous situation many years ago. Keating said,
this was the recession in Australia. Of course, this was
the recession we needed to have, if you remember that.
And the Deputy Reserve Bank Governor at the time said,
actually this is good because we can go in and
all these businesses that don't exist shouldn't exist, they're going
to go and that's ultimately good for the economy. Not

(03:50):
that that sort of news. If you're in the middle
of it right now, is there any comfort at all?

Speaker 1 (03:55):
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