Business Spectator – Australia’s banking fraternity will be feeling a lot more relaxed today after Canberra backed away from changes that would make it much easier for troubled companies to keep trading.
At present, there’s very little incentive for directors of troubled companies to attempt the hazardous task of trying to turn the company’s fortunes around. Typically directors, panicked by their lawyers’ advice that they could be held personally responsible for debts the company racks up while insolvent, scramble to the telephone and call in administrators as soon as they realise that their company is in serious trouble. At that point, the company’s bankers usually respond by appointing receivers to protect their interests.
