AICM Risk Report 2021

Page 1

AICM

Risk

REPORT

2021


Welcome

Trevor Goodwin LICM CCE

Nick Pilavidis FICM CCE

National President

Chief Executive Officer

Our second risk report is released in a much

When this report was first proposed we expected

different environment to our first.

to see a slow increase of insolvency activity that would be caused by structural change which

2020 saw our inaugural report issued with the

by nature takes a while to unfold. We were not

view to providing a benchmark for what has since

expecting the shock of the pandemic and the shift

been a record period of low insolvency activity.

in our behaviour caused by the various necessary

Many questions have been asked as to why

government interventions in our society.

insolvency activity has been low in the last twelve months and when insolvencies will escalate.

Some measures stimulated activity and created micro economies such as those businesses

The end to JobKeeper in March 2021 comes at

based in the suburbs that benefitted from their

a time when the economy is still undergoing

customers being available all day, others such as

adjustments from the pandemic and will likely see

suppliers to offices have seen a drastic reduction

many businesses that were viable in 2020 close

in their sales and profit.

due to significant shifts in our spending habits. Expected rising unemployment rates and the

As always we’re guided by the numbers and we

result of continued government intervention such

are very pleased that the number of contributors

as the border closures and permanent changes

to our report has increased and the effort they’ve

to our behaviour such as travel and working from

put into preparing interpretations of the data is

home will have a bearing.

greatly appreciated.

I commend the team for their input in preparing

We’ve prepared the report to give readers the

this report and the work that has gone into it,

ability to glean a high level view from the first

together with the accompanying insolvency

half and then dive into the detail when ready.

seminars and networking by credit professionals. It is also pleasing to see a greater awareness of the important work our members perform to ensure their firms remain profitable and financially sound.

2 AICM Risk Report 2021


Our 2021 SUPPORTERS National partners

Trusted Insights. Responsible Decisions.

Divisional partners

CREDIT MANAGEMENT SOFTWARE

Divisional supporting sponsors

AICM Risk Report 2021 3


Tips FOR MANAGING RISK How to manage risk

Understand your customers

Want to reduce your risk exposure to customers

z Continued certainty means understanding your customer will be a key way to manage risk.

and suppliers? I’d recommend a laser focus, especially throughout the rest of 2021, on the

z Get to know your business clients by finding out:

following three things: 1) Due diligence reviews

c Who their customers are.

How do you review and onboard customers,

c What supply risk(s) they face from others.

suppliers and other third parties? Do you apply

c Whether they have increased operating

a fit-for-purpose approach based on the size and scale of your risk exposure?

costs that may impact their viability. c Whether they have trading restrictions risks. c Whether they are selling discretionary items.

2) Monitoring and surveillance Do you use commercial alerts, configured to

c Whether they are vulnerable to technology

disruption.

your needs, to apply the right triggers and monitor for early warning signs? 3) Strategic risk oversight How are you identifying potential phoenix operators, and how are you evaluating your indirect risk exposure to the credit risk contagion from your accounts’ counterparties? – Brad Walters, Equifax

– Andrew Spring MICM, Jirsch Sutherland

z Use every tool in a credit professionals arsenal including: c Understanding industry trends. c External data and analysing their exposures. c Thorough risk assessment. c Direct Relationships with customers. c Sales and organisational intelligence. c A network of credit professionals across

industries and sectors.

New reforms z Ensure you are familiar with the new reforms (see ARITA guide and other information here). z Key tips for assessing Debt Restructuring plans: c Consider the qualifications and experience

of the Restructuring Practitioner. c Apply a commercial lens and ask is this in

the best interests of our business. c Accessing information from your network in

the credit industry. c Use a similar approach as a Deed of

Company Arrangement proposal while being aware of the differences.

4 AICM Risk Report 2021

Outlook z While uncertainty remains high, the answers will be found by keeping focus on the fundamental skills of a credit professional, understanding your customer, understanding your industry and ensuring records and securities are accurate and up to date. With this in place and access to legal, insolvency and debt collection experts a solution will be found. z Credit professionals will need to work even closer with their sales teams to increase sales without increasing risk and ensuring efforts are not deployed in pursuit of unviable customers.


What YOU NEED TO KNOW The review of personal and corporate insolvency

would increase significantly in 2020, economic

reveals that the government’s responses to the

uncertainty was the number one concern for many

COVID-19 pandemic have resulted in a dramatic

credit professionals driven by global trends and

change in conditions which are largely contrary

the summer of bushfires but not yet impacted by

to what would be expected to occur with the level

COVID-19.

of disruption experienced. Once the pandemic gripped Australia in To summarise the statistics and commentary of

March 2020 and lockdown commenced, the

this report, we break the summary into what the

government’s action to implement temporary

corporate and personal insolvency appointments

protections and provide financial support via

reveal and what they mean for credit and

JobKeeper and other measures took immediate

insolvency risk into the future.

effect. Graph 1 (below) shows that insolvencies dropped by 41% in 2020 compared to 2019 and

Corporate insolvency

Graph 2 (next page) shows that the 1st quarter

Entering 2020 economic conditions and industry

was relatively in line with 2019 however the

expectations indicated insolvencies and credit risk

remaining 3 quarters saw 50% less insolvencies.

Graph 1: Companies entering an insolvency process 12,000 10,000 8,000 6,000 4,000 2,000 0 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Appointments

7,277

7,737

7,521

9,113

9,437

9,601

10,481

10,632

10,821

8,794

10,164

8,505

7,811

8,044

8,324

4,943

Change

10%

6%

-3%

21%

4%

2%

9%

1%

2%

-19%

16%

-16%

-8%

3%

3%

-41%

Data sourced from Australian Securities and Investments Commission Series 1 Companies entering external administration and controller appointments Reproduced with permission. Note: Series 1 data reflects the number of companies in the period that have entered external administration or had controller appointed for the first time. Some companies may have several appointments which is captured by ASIC’s series 2 data.

AICM Risk Report 2021 5


Graph 2: 2020 v 2019 quarterly comparison 2,500

2,000

1,500

1,000

500

0

n 2019 n 2020 Change

March

June

September

1,817

2,095

2,309

2,103

1,747

1,203

946

1,047

-4%

-43%

-59%

-50%

n 2019

December

n 2020

Data sourced from Australian Securities and Investments Commission Series 1 Companies entering external administration and controller appointments Reproduced with permission.

Graph 3: State by state comparison

For credit professionals, while there

1 January 2020 – 31 December 2020

was an initial reaction to requests for payment extensions and support, the government stimulus payments quickly resulted in an improvement of most organisations ledgers, with many members reporting their receivables are in their best shape in

28 | -28%

recent memory as they entered 2021. 931 | -42%

The decrease in corporate insolvency

404 | -47%

appointments is evident in every sector

169 | -50%

as seen in every state (Graph 3) and 1,772 | -40% 106 | -24% 1,519 | -37%

industry sector (Graph 4 in next page). The top 5 industries for insolvency appointments remains unchanged between 2019 and 2020 being:

14 | -71% Data sourced from Australian Securities and Investments Commission Series 1 Companies entering external administration and controller appointments Reproduced with permission.

1. Business and personal services 2. Construction 3. Accommodation 4. Retail trade 5. Transport, postal and warehousing.

6 AICM Risk Report 2021


Throughout 2020 and early 2021 speculation

Despite the urgency to have these new

that a tsunami of insolvencies is on the horizon

processes in place, until 31 March 2021 we had

dominated conversation and media. This was

just 5 debt restructuring processes commence

driven by the logical assumption that once

and 38 entities accessing the temporary

temporary insolvency protections ended on

restructuring relief.

31 December 2020 the approximately 4,000 entities that would normally have entered

OUTLOOK

insolvency would start to flow through with a further spike once JobKeeper payments end

Accommodation and retail trade are two

at the end of March 2021.

sectors where COVID-19 restrictions had This speculation led to the government

significant impact and therefore could be

implementing insolvency reforms commencing

expected to move up the order in 2021.

1 January 2021 being:

However, page 35 shows these industries are actually paying better than last year

z Debt restructuring process for small business.

while other sectors that experianced less

z Temporary restructuring relief.

significant impacts, such as construction,

z Simplified liquidations.

have deteriorated.

(See here for more detail on these reforms)

Graph 4: Corporate insolvencies by industry Information, media & telecommunications Wholesale trade Electricity, gas, water & waste services Professional, scientific & technical services FIS – other financial services Manufacturing Rental, hiring & real estate services Transport, postal & warehousing Retail trade Accommodation & food services Construction Other (business & personal) services 0

500

1000

1500

n 2020

2000

2500

3000

3500

n 2019

Data sourced from Australian Securities and Investments Commission Series 1A Companies entering external administration and controller appointments by industry. Reproduced with permission.

AICM Risk Report 2021 7


Graph 5: Small business reform notices Actual 1 January 2021 – 31 March 2021 50 40 30 20 10 0 1/1/21

8/1/21

15/1/21 22/1/21 29/1/21

5/2/21

Restructuring Relief Notices

12/2/21 19/2/21 26/2/21

5/3/21

12/3/21 19/3/21 26/3/21

Restructuring Practioner appointed

All Notices

Data sourced from Australian Securities and Investments Commission Published Notices website. Reproduced with permission.

“While we expected a tsunami of insolvencies to have occurred at the end of October before stimulus and protection measures were extended, we now expect a more gradual dialling up of insolvencies to traditional levels over the next six months and then higher over the 12 months after that.” – John Winter, ARITA Further Graph 5 (above) shows while government expected activity to be in the 1,000s, actual activity has been in the 10s and it wasn’t until: z 11 January 2021 for the first temporary relief notice to be lodged z 14 February 2021 for the first appointment of a Restructuring Practitioner z 12 companies lodged notice on 31 March 2021

OUTLOOK An increase in insolvencies is expected in the April to June quarter as unviable businesses and zombie companies wind up following the end of JobKeeper payments. Given the positive economic indicators prevalent in early 2021, future quarters are

being the last day possible to access the

likely to see insolvencies at similar levels as

3 month relief period.

2019.

The absence of a spike in insolvencies does not come as a surprise to many AICM members due to the improved status of their ledgers and their willingness to support viable customers. A return to normal levels of insolvencies presents

8 AICM Risk Report 2021

“More than four new businesses were established for every one that closed in a pandemic-led 2020” – Simon Bligh, illion


“In normal circumstances, personal insolvencies would be expected to increase within weeks of an economic shock. That is certainly what happened during the GFC. However, as will be explored below, circumstances were especially abnormal in 2020.” – Nick Jenkins, Equifax Australia a challenge to credit professionals as they balance

Personal insolvencies

competing priorities including:

The trends with personal insolvency have

z Supporting their business to generate sales.

generally matched corporate insolvency

z Managing an escalation in risk.

appointments. Since late March 2020 personal

z Working closely to support existing customers. As existing customers show signs of cashflow pressures, credit professionals will be calling on their experience, systems and data to understand which customers are: z Experiencing short term issues but are

insolvencies have declined to record low levels following the implementation of temporary protections, JobKeeper minimising impacts of businesses forced to close or alter operations and access to superannuation funds. As we entered COVID-19 personal insolvencies peaked at 1,015 in the fortnight ending 19 April 2020. Following this we saw continued decline until a record low in

engaging with them openly to demonstrate

the fortnight ending 10 January 2021, as seen in

their capacity to return to a viable operation.

Graph 6 (below).

z Not engaging with them but require further attention to create engagement and support

Following the end of the temporary protections on

through to normal trading.

31 December 2020, there has been some increase

z Unviable and should be encouraged to enter an insolvency process.

in personal insolvencies in a similar fashion as in prior years however still at very low numbers.

Graph 6: Personal insolvencies 1 July 2019 to 7 March 2021

1400 1200

Seasonal spike

1000 800 600 400 200 0

Seasonal but lowest on record

1 0 0 21 19 19 20 19 20 20 20 19 20 20 019 20 20 19 20 20 9 20 02 02 02 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 r2 201 ul 2 ct b 2 Mar 2 Apr ov ec ov un ct ug ay ep an ec ep Jul ov ec 4 Jan 7 Ma e O J 4J ug N J D S A N O S F D M 1 2 D N A 4 9 6 1 3 1 1 2 9 8 4 3 1 1 9 o 26 17 11 27 29 to to o2 o6 to to to to to to o2 to o2 o2 to t to ul t r to to to nt gt ct ov eb ep 9 to un y to Jun ug ep b t Mar t ct Jul 1J Oc Ap ec 11 Ja ov Au Jan 2F 3S 9O 9J Fe 1 201 8N Ma 1S 27 De 6 D 6A 21 N 2 3 4 1 2 2 1 l 9 2 2 1 0 2 4 6 4 u 6 1 1 1 J 1 29

Data sourced from Australian Financial Security Authority Fortnightly bankruptcy and personal insolvency statistics Reproduced with permission.

AICM Risk Report 2021 9


Graph 7: Business v non-business personal insolvencies 1 July 2019 to 7 March 2021 1400 1200 1000 800 600 400 200 0

19

9 0 9 0 0 0 21 21 19 19 20 20 20 20 20 20 20 2020 19 20 01 01 02 02 02 02 20 20 20 20 20 20 20 20 20 20 20 20 20 l2 p 2 Oct 2 ar v2 c 2 Jan b 2 Mar pr ov ec ov un ct ug ay an ec ep Ju o e e M J A N J D A N O S F D M 2 D N 4 3 1 4 3 2 6 14 19 9 7 9 26 22 o7 o6 17 o1 o 1 l to 9 to to to to to o2 o 2 n to o 2 n to t to to t to o2 u bt vt to pt o1 nt pr ug ep a b t Mar ct Ju ct un ug vt 1J Fe Oc Oc Ju a Se 9t No ay J J A S e e A e o A J 7 1 1 2 3 9 9 1 F 1 8 M 1 D 2 D 6 N 0 2 2 1 1 2 2 1 2 9 26 13 24 4 10 l2 16 14 16 Ju 29 ul 4J

1 l to

20

ug 1A

19

20

e 8S

Not in a business or company*

In a business or company*

Total

*You are in a business or company if you: – have traded as a sole trader, including as a contractor, sub-contractor or similar, or been involved in a partnership, and/or – been a director/secretary or held a management role in a company. Data sourced from Australian Financial Security Authority Fortnightly bankruptcy and personal insolvency statistics Reproduced with permission.

When looking at the number of business related

which aligns with the absence of a spike in

personal insolvencies (where the individual has

corporate insolvency, unemployment trends and

a connection with a business as a sole trader

may indicate that those missed by government

or owner), Graph 7 (above) shows that the

support payments have sought the relief of

proportion of business and non-business related

bankruptcy.

insolvencies has been relatively uniform with an average of 26.3% personal insolvencies being

This pressure on individuals is further indicated

business related between 1 July 2019 and 7 March

by Graph 9 (next page) which shows relatively

2021. However, when we analyse the more recent

consistent drops in types of appointments with

periods in Graph 8 (next page) we see a slight

a proportional increase in debtors petitions in

change:

recent months.

z 12 months from 9 March 2020 to 7 March 2021 saw 25.2% business related appointments z 6 months to 7 March 2021 saw 25.4% business related appointments z 3 months to 7 March 2021 saw 23.3% business related appointments

The management of small business and consumer debts will be an area credit professionals will need to utilise their experience and best practice processes to ensure individuals experiencing financial distress access the appropriate pathways, including self help via repayment arrangements, accessing financial hardship support or moving

While relatively small, these changes indicate more

to resolve insurmountable debts via a bankruptcy

pressure is being felt by those not in business

process.

10 AICM Risk Report 2021


Last 12 Months

last 3 months

last 6 montths

Graph 8: Business v non-business personal insolvencies Non-business Non-business Last 12 months 74.8%

Business

25.2%

Last 6 months 74.6%

25.4%

Business

Non-bus

Last 3 months 76.7%

23.3%

 Business  Non-business Data sourced from Australian Financial Security Authority Fortnightly bankruptcy and personal insolvency statistics Reproduced with permission.

Graph 9: Types of personal insolvency appointments 6 April 2020 to 21 February 2021 800 700 600 500 400 300 200 100 0

1 1 1 1 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 020 202 020 202 202 202 ril 2 May 2 May 2 May 2 une 2 une 2 July 2 July 2 ust 2 ust 2 ber 2 ber 2 ber 2 ber 2 ber 2 ber 2 ber 2 ber 2 ber 2 uary uary uary uary p g g A o r r n n m m m m m to Au 19 l to 3 to 17 to 31 o 14 J o 28 J to 12 to 26 9 Au tem ptem Oct Oc Nove Nove Nove Dece Dece 10 Ja 24 Ja 7 Feb 1 Feb 4 e ep 23 t t o ri 18 l to e y y to o 6 S to ry to ry to o2 0 S er to to r to 1 to 15 un 3 July July t 29 to 13 to 27 Ap 4 Ma 8 Ma June June pri t t r 2 J r s A 0 o e y t o e t u r a 2 a 1 t 6 1 1 t 29 g mb er 15 er er be er ob mb 27 nu nu rua Au ugus mber pte 5 Oct Octo vemb emb vemb emb Dece 11 Ja 25 Ja eb 10 A Se 8F o ec ov 8 19 2 No 24 Septe 21 2 N D N 14 30 16 7

Debt agreements and personal insolvency agreements Debtor’s petition Sequestration order Total bankruptcies** Total personal insolvencies*** ** Total bankruptcies include debtor's petitions and sequestration orders. *** Total personal insolvencies includes bankruptcies, deceased estates, debt agreements and personal insolvency agreements. Deceased estates are not displayed individually. AFSA provides explanations of these different types of appointments; Sequestration order, Debt agreements, Personal insolvency agreements, and Debtors petition. Data sourced from Australian Financial Security Authority Fortnightly bankruptcy and personal insolvency statistics Reproduced with permission.

OUTLOOK The outlook for personal insolvency is equally as murky as corporate insolvencies. Brad Walters of Equifax thinks the withdrawal of government stimulus will mean “the results can only go one way. The withdrawal of that type of cash will start to uncover financially stressed consumers that will need help, or the inevitable will occur. The million-dollar question is how high and how quick”. Additionally, an expected increase in corporate insolvencies is likely to impact employment and increase stress for consumers. On the positive side, consumer confidence is at record highs and we are experiencing strong improvement in unemployment numbers.

AICM Risk Report 2021 11

Business


Analysis & COMMENTARY What a difference a year makes!

John Winter Chief Executive Officer ARITA This is one of those times when you start trying to

At a bigger level, the Government also indicated

write something and you throw your hands up in

a profound change in how they believe financial

the air and shout “where on earth do I even start?”

distress should be approached. The Small Business Restructuring legislation – for I hesitate to use

What we can certainly start off by acknowledging

the word ‘reform’ to describe it – is a paradigm

is that the rule book in our space pretty much

shift away from a ‘creditor rights’ focussed

got thrown out the window by the Federal

regime toward one which downplays those

Government in the last year. They turned on its

creditor rights and replaces them with a focus

head the terms of how we reasonably expect

on, at least theoretically, keeping the distressed

business in financial distress should behave. They

entity going. There’s plenty to debate here about

placed unbelievable and inequitable pressure on

the effectiveness of the new regime and its

creditors and how you do business.

appropriateness but let’s really just focus on the fact that the Government has clearly indicated

There’s an old saying: capitalism without

that it wants our insolvency regime to be used less

insolvency is like Catholicism without hell. And

for the benefit of creditors.

that saying was most clearly demonstrated in the last 12 months in terms of the behaviour of debtors. Many took excessive advantage of the

The market outlook

nine month-long insolvent trading moratorium, the

The profound impact of JobKeeper in keeping

lifting of the threshold for statutory demands and

businesses afloat saw insolvencies fall to less

extension on timeframes for the enforcement of

than 50% of their long-term average over the last

statutory demands.

year. While we expected a tsunami of insolvencies

“While we expected a tsunami of insolvencies to have occurred at the end of October before stimulus and protection measures were extended, we now expect a more gradual dialling up of insolvencies to traditional levels over the next six months and then higher over the 12 months after that.” 12 AICM Risk Report 2021


to have occurred at the end of October before stimulus and protection measures were extended, we now expect a more gradual dialling up of insolvencies to traditional levels over the next six months and then higher over the 12 months after that. With JobKeeper now coming off and stat demands being deployed again we are seeing the first signs of insolvency levels necessarily picking back up. In parallel we are starting to see personal insolvencies rising as well. Absent JobKeeper and the other protections, those businesses that would have and should have entered into an insolvency over the last 12 months will begin to do so. The game of catch up will have to start. In addition, we will see businesses start to fail due to the economic impacts of COVID. COVID has caused the economy to shrink below its early 2020 levels. Less money is being spent in the economy. Unemployment is up. This means

“One thing to note is that Government recently announced easier-to-access SME loans as its next COVID stimulus tool to prop up distressed businesses.”

some businesses will have to contract and others will shut.

requirement to review and improve the operations of any SME that goes through the process.

There’s obvious at-risk sectors such as tourism

It is simply a debt cram down process. It is a

and hospitality but even with those sectors, some

mechanism in which the small business remains

businesses are turning record profits.

in charge while they try to negotiate a reduction in what they owe and/or extended payment

As credit managers, though, it is obvious that we

arrangements or forbearance with a goal of giving

are moving into a part of the cycle where your

them breathing space to trade on. It assumes that

debt enforcement skills are returning to use but

by reducing their debt load, they will become

that, also, there is a heightened risk of insolvency

more sustainable.

in your customers. Clearly, though, creditors are being asked to take

Impacts of reforms

the haircut to achieve this. And as credit managers

The Small Business Restructuring legislation has

process with a solid expectation that you will

the capacity to be quite the game-changer for

compromise your debt to give the business a

how SMEs respond to financial distress and a

lifeline.

you will be dragged into a new and very different

solvency crisis. One thing to note is that Government recently Let’s, though, deal with what the new regime

announced easier-to-access SME loans as its

is and is not. Firstly, it is not a restructuring

next COVID stimulus tool to prop up distressed

or turnaround process. There is absolutely no

businesses. This may well see the very same SMEs AICM Risk Report 2021 13


that have been given access to the SBR process

be of real concern to all credit managers for the

increasing the debt load. Quite the juxtaposition.

extent that it tips the balance toward your debtors and the size of the exposure you may have to

Of course, it’s not a magic pudding and, ironically,

carry in that situation.

the new SME loans may well see more SME’s having to use the SBR process not too far down the track.

Getting the right advice Understanding what your rights and risks are

Further legislative changes to come

as a creditor is essential. It’s important to only

Take up of the Small Business Restructuring

While many advisers, including lawyers, may

process in its first several months of offering

hold themselves out as experts, many are often

has been tepid, with less than 20 firms availing

not fully qualified. ARITA Professional Members,

themselves of the temporary protections on offer

which includes accountants, lawyers and advisers,

and only three actual appointments of a small

are post-graduate qualified in restructuring,

business restructuring practitioner having been

insolvency and turnaround and are required to

made.

undertake ongoing education to ensure they are

seek advice from a properly qualified expert.

fully up to date with new developments in the law The Government is clearly sensitive to this being

such as this new regime. Only ever engage with an

perceived as a failing of the system.

ARITA Professional Member. You can check to see if your adviser is a member at https://www.arita.

In reality, it’s much the fact that firms have

com.au/member

continued to be propped up by JobKeeper and the temporary protections. As statutory demands continue to increase and stimulus cash wanes from

Is there an upside?

balance sheets, there will, undoubtedly, be greater

Well, it’s undoubtedly a challenging time that’s

take up of the new regime.

coming. But the message could not be more clear: good credit management has never, ever been

However, we are continuing to hear that

more critical. All organisations will need to be

Government may open up the SBR criteria from

more judicious in how they provide trade credit

the current $1 million of debt to $3-5 million. That

and pay far greater attention to the financial and

would allow more than 80% of all insolvencies to

operational performance of your customers.

be steered into the SBR process. And that should At the risk of cursing myself with a forecast that

“Take up of the Small Business Restructuring process in its first several months of offering has been tepid, with less than 20 firms availing themselves of the temporary protections on offer and only three actual appointments of a small business restructuring practitioner having been made.” 14 AICM Risk Report 2021

may prove very wrong, the now milder than expected increase in insolvencies and progressive rise to a peak in about 18 months is a more manageable environment for credit managers than the insolvency tsunami we would have had in late 2020 had not changes been made to the stimulus and support provisions. But, make no bones about it, we are going to see significant rises in corporate insolvencies, personal bankruptcies and the flow on impacts to economic growth and unemployment. So with all of that in light: there’s no better time to be a credit manager!

Analysis & Commentary


Consumer insolvencies only have one way to go Nick Jenkins Head of Debt Services Equifax Australia In normal circumstances, personal insolvencies would be expected to increase within weeks of an economic shock. That is certainly what happened during the GFC. However, as will be explored below, circumstances were especially abnormal in 2020.

Unprecedented Stimulus

Consumer Defaults (2006-2012) GFC hit with a 33% increase in Defaults in one quarter

The economic impact was felt hit, with a reduction in GDP of 190bps. The reaction of the then

Thousands

immediately when the GFC

250 200

inject cash into the economy by way of handouts to a majority of Australians. This ‘free money’ undoubtedly had other economic

Volume

Federal Government was to 150 100 50

benefits, but it did not prevent into financial distress. In the six

0 20 0 20 6 Q 06 1 20 Q 0 2 20 6 Q 06 3 20 Q 4 20 07 Q 07 1 20 Q 0 2 20 7 Q 07 3 20 Q4 0 20 8 Q 08 1 20 Q 0 2 20 8 Q 08 3 20 Q 0 4 20 9 Q 09 1 20 Q 0 2 20 9 Q 09 3 20 Q4 1 20 0 Q 10 1 20 Q 1 2 20 0 Q 10 3 20 Q 1 4 20 1 Q 11 1 20 Q2 1 20 1 Q3 11 20 Q4 1 20 2 Q 12 1 20 Q 1 2 20 2 Q3 12 Q4

a lot of Australians getting months following the start of the

All Defaults

GFC, Australia experienced a 33% increase in consumer defaults.

Financial Defaults

Consumer Insolvencies (2006-2012)

Personal insolvencies jumped by 20% in 2008, then took three

GFC hit with a 20% increase in insolvencies

years to return to normal levels. 10,000

When the ‘Corona-recession’

9,500

arrived, within two months an

9,000

immediate reduction to GDP of 580bs meant Australia was to face the first recession in over 30 years. A new Fiscal Policy

8,500 8,000 7,500 7,000

monetary policy had already

6,500

been exhausted. The theory of

6,000

injecting cash into the economy quickly would need more thought and specific targeting to avoid

Ma rch Se Jun quar pte e ter De mbe quar 200 ce r q ter 6 mb ua 20 e rt 0 Ma r qua er 20 6 rch rte 06 Se Jun qua r 200 pte e rte 6 De mbe quar r 200 ce r q ter 7 mb ua 20 Ma er q rter 07 rch uar 200 Se Jun qua ter 20 7 pte e rte 07 De mbe quar r 200 ce r q ter 8 mb ua 20 e r 0 Ma r qu ter 20 8 rch arte 08 Se Jun qua r 200 pt e rte 8 De emb quar r 200 ce er q ter 9 mb ua 20 Ma er qu rter 09 rch ar 200 t Se Jun qua er 20 9 pte e rte 09 De mbe quar r 201 ce r q ter 0 mb ua 20 e r 1 Ma r qu ter 2 0 rch arte 010 Se Jun qua r 20 pt e rte 10 De embe quar r 20 ce r q ter 11 mb u 2 Ma er q arter 011 rch uar 20 1 Se Jun qua ter 20 1 pte e rte 11 r q De mbe uar 201 ce r q ter 2 mb ua 20 er rte 12 qu r 2 art 012 er 20 12

playbook would be needed as

significant impact.

Analysis & Commentary

AICM Risk Report 2021 15


In contrast to the GFC, consumers had the

were more tightly regulated when COVID-19

opportunity to pause their mortgage or rental

arrived on Australian shores than they were when

payments and typically found that creditors,

the GFC hit.

such as utility companies, were willing to offer them generous repayment plans. Perhaps

The Post-Coronavirus state of play

most important of all, JobKeeper meant Australians who would have otherwise ended up

It’s pretty obvious to point out that no one could

unemployed avoided losing their income. Those

have predicted how we were going to weather

who were already unemployed, or who became

the pandemic and be in the position we are today.

unemployed during the pandemic, received

Most forecasts had dire economic impacts circling

significantly more generous welfare payments

15%+ unemployment rates. The unemployment

than was the case prior to the pandemic.

rate peaked at 7.5% in 2020 and in January 2021

Regardless of their employment situation,

sits at 6.4% well below the forecast ranges. It’s

Australians had the option of withdrawing up to

fair to say that the targeted stimulus has had a

$20,000 from their super accounts. On top of all

far greater impact on the economy and flattening

that, unsecured debt agreement administrators

the recessionary curve. Consumer sentiment is

Household income and consumption* %

%

Real, year-ended growth Consumption

8

8

0

0 Disposable income

-8 %

%

16

16

8

8

0

0

-8

-8

1995

2000

2005

2010

2015

2020

*Household sector includes unincorporated enterprises; disposable income is after tax and interest payments; saving ratio is net of depreciation. Sources: ABS, RBA

Year-ended

$b

20

20 Total

15

15 Owner-occupier

10

10 Investor

5 0

2004

2008

2012

2016

*Seasonally adjusted

Credit growth by sector %

Excluding refinancing

$b

-8

Saving ratio

1990

Housing loan commitments*

5

2020

0

Sources: ABS, RBA

Variable housing interest rates %

Housing

%

20

20

5

10

10

4

% Major banks’ reference rates

5

Outstanding loans* New loans*

4

Business

0

0

Personal

-10

-10

-20

-20

3 2

2000

2004

2008

2012

2016

2020

Sources: ABS, APRA, RBA

16 AICM Risk Report 2021

3

2015

2016

2017

2018

2019

2020

2

*Series break in July 2019; thereafter, data based on EFS collection Sources: APRA, banks’ websits, CANSTAR, RBA, Securitisation System

Analysis & Commentary


Personal insolvencies last 5 years

coming back and although consumption took a hit it interesting to note that the savings ratio went from around 6% at the start of 2020 up to 22%. Consumers have propped up their balance sheets and have some cash reserves in their

Quarterly Volume

is recovering slowly. It is

seem. The consumer credit industry is experiencing

Regulation change influenced downward trend pre-covid

Ma rc Se Ju h qu pt ne ar e De mb qu ter 2 ce er art 01 m qu er 5 be a 20 Ma r q rter 15 rc uar 20 h Se Ju qu ter 2 15 pt ne ar t 01 De emb qu er 2 5 ce er art 01 m qu er 6 b a 2 Ma er q rte 016 rc uar r 20 Se Ju h qu ter 16 pt ne ar 20 e De mb qua ter 2 16 ce er rte 01 m qu r 2 7 b a 0 Ma er q rter 17 rc uar 20 h Se Ju qu ter 17 pt ne ar 20 1 e De mb qua ter 2 7 ce er rte 01 m qu r 2 8 be a 0 Ma r qu rter 18 rc ar 20 Se Ju h qu ter 2 18 pt ne ar 01 e De mb qua ter 2 8 ce er rte 01 m qu r 2 9 b Ma er q arte 019 rc ua r 20 Se Ju h qu rter 19 pt ne ar 20 em q te 19 be uar r 20 r q ter 20 ua 20 rte 20 r2 02 0

bank accounts it would

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

all time lows in many

Total

of its stress indicators. Delinquencies, defaults,

Defaults last 5 years

judgements, and 250,000

insolvencies are at record all-time lows across the

200,000

payments that were given to consumers are once again propping up their balance sheets and reducing debt positions, which can only be a

Quarterly Volume

board. The stimulus

150,000 100,000 50,000

good thing. The hidden 0 20 16 20 Q1 16 20 Q2 16 20 Q3 16 20 Q4 17 20 Q1 17 20 Q2 17 20 Q3 17 20 Q4 18 20 Q1 18 20 Q2 18 20 Q3 18 20 Q4 19 20 Q1 19 20 Q2 19 20 Q3 19 20 Q4 20 20 Q1 20 20 Q2 20 20 Q3 20 Q4

risk is within deferral and hardship populations that are still at far higher than normal volumes. The lack

Judgements (rolling 12 months)

of a hardship flag within

1,500 1,000 500

government is withdrawing

2016

2017

Au gu st Se pt em be r Oc to be r No ve m be r De ce m be r

Ju ly

Ju ne

ua

ru Fe b

the time of writing, the

Ja n

The bad news is that, at

Ma y

0 ry

Prepare yourself for the bounce back

2,000

il

appears.

2,500

Ap r

lenders as the new normal

3,000

y Ma rc h

makes the waters murky for

3,500

ar

Credit Reporting regime

4,000

Judgements Volume

Australian Comprehensive

2018

2019

2020

the last of the stimulus, the

Analysis & Commentary

AICM Risk Report 2021 17


results can only go one way.

Entry rates into delinquency

The withdrawal of that type of cash will start to uncover financially stressed consumers that will need help, or the inevitable will occur.

20,000 18,000 16,000 14,000

The million-dollar question is how

12,000

high and how quick will this turn on

10,000

lenders? There is no crystal ball to answer that for everyone, but it is prudent to get prepared.

8,000 6,000 4,000 2,000 0

Data and analytics is the new

Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

black and anyone heading into

Credit Cards 30+ delinquency

this type of adversity without investing in data and analytics

% of Open Account holders – Current payment status 30+dpd

is ill equipped. Access as much indicators that consumers are experiencing financial stress real-time. A customer’s experience depends on the lenders ability to

Stress Metics (%)

data as possible and get lead 1.20% 1.00% 0.80%

understand their situation when

Nov 2018

it is happening not when they

Feb 2019

May 2019

Aug 2019

Nov 2019

Feb 2020

May 2020

Aug 2020

Aug 2020

finally decide to communicate it. Only then can the lender tailor

Personal Loans 30+ delinquency

their communication and hardship

% of Open Account holders – Current payment status 30+dpd

offerings that will benefit the customer and the lender.

18 AICM Risk Report 2021

3.00% 2.50% 2.00%

Nov 2018

Feb 2019

May 2019

Aug 2019

Nov 2019

Feb 2020

May 2020

Aug 2020

Aug 2020

Mortgages 30+ delinquency Open Accounts with 30+dpd in Arrears – Buy buyer type % Open Accounts by Days in Arrears

“The hidden risk is within deferral and hardship populations that are still at far higher than normal volumes. The lack of a hardship flag within Australian Comprehensive Credit Reporting regime makes the waters murky for lenders as the new normal appears.”

Stress Metics (%)

3.50%

1.00% 0.80% 0.60% August 2019

October 2019

December 2019

February 2020

April 2020

June 2020

Analysis & Commentary


2021 – How to bring clients back to the future

Andrew Spring MICM Partner Jirsch Sutherland For many of us, 2020 was a year of ‘firsts’:

back, from pandemic-support time to the future:

pandemic – check; border closures – check;

2021 and beyond.

lockdowns – check; working from home – check; and Zoom/video meetings – triple check! The

With many of the federal government’s support

insolvency industry was no different. For those

measures ending at the end of March, it’s back

readers who attended the recent AICM Insolvency

to ‘business as usual’ for many of Australia’s

Seminars, you would be aware that following the

SMEs. And while many will face a long road to

deepest recession our country has experienced,

recovery, the economy is bouncing back better

since the Depression, both corporate and personal

than predicted and there’s talk that the insolvency

insolvency appointments plunged to historically

‘tsunami’ will be downgraded to a couple of waves.

low levels. This is largely because the support measures – The impact of both financial stimulus and

which approached 20% of GDP – enabled many

debt forbearance measures by governments

struggling SMEs to delay winding up – which is

have allowed a lot of businesses to continue

reflected in the current low number of external

(if not thrive) and provided time for them

administrations. Moving forward, however,

to adjust their operations to deal with the

businesses will no longer have the support of:

changing marketplace. Plenty of those in

z JobKeeper

the credit community have remarked about improved ledgers and smoother sailing, but still

z Cashflow boosts

occasionally glance over their shoulders looking

z Various state-based grants

for the anticipated rain clouds.

z Payroll tax relief z Rent deferral and relief

Over the coming months, many COVID-19 impacted businesses will struggle, creating

z The insolvent trading moratorium

various challenges for credit professionals.

z ATO tax payment deferments

The following strategies can help you navigate

z The higher instant asset write-off threshold

the new ‘business as usual’ and bring your clients

and wider eligibility

“With many of the federal government’s support measures ending at the end of March, it’s back to ‘business as usual’ for many of Australia’s SMEs. And while many will face a long road to recovery, the economy is bouncing back better than predicted and there’s talk that the insolvency ‘tsunami’ will be downgraded to a couple of waves” Analysis & Commentary

AICM Risk Report 2021 19


Yet despite this support and the current low number of insolvencies, the GDP remains below pre-COVID-19 levels, resulting in less money circulating in our economy, and Euler Hermes’ 2021-2022: Vaccine economics report predicts insolvencies in Australia will increase by 10% in 2021 and 10% in 2022 compared with 2019. This is more than double the number of insolvency

“To help protect your asset, it’s vital to keep a lookout for the signs a client is experiencing significant or prolonged financial distress and/or has increased exposure to risk”

appointments than 2020. SMEs who used the various government support measures to help fill a debt hole from before COVID-19, particularly those in sectors still under stress from the lingering impact of the pandemic and the recent east coast floods – not to mention snap lockdowns – will struggle the most. These sectors include tourism, hospitality, food services, events, sports, retail, insurance, printing, commercial real estate particularly in the Melbourne CBD, parts of Brisbane and Cairns. The mining and construction industries are in a better position now than pre-COVID-19 and contributing to the improvement of our overall economic situation, but may also potentially be hiding the pandemic’s impact on other industries.

– whether their client base will be impacted by the end of the government stimulus z Understanding where their pressure is coming from. The ATO, banks and landlords will recommence pursuing payments, which may impact your clients’ ability to pay trade suppliers. z Looking out for changes in their behaviour which can indicate distress (for example, a client who is usually friendly and engaged during your conversations may act disinterested or refuse to accept your call). If you are operating under flexible working arrangements with staff, ensure your team is aware of the increased risk of insolvency and are looking out for early warning signs, such as

How credit professionals can navigate the coming months To help protect your asset, it’s vital to keep a lookout for the signs a client is experiencing

requests to renegotiate payment terms and plans and difficulty engaging with the business, and report this to you ASAP. If the customer shows signs of financial distress, do not shy from asking them whether they are seeking help.

significant or prolonged financial distress and/or has increased exposure to risk by: z Getting to know your business clients by

What to do if you identify significant financial distress

finding out: – who their customers are

If a client/customer is in financial distress and heading towards insolvency, you need to act

– what supply risk(s) they face from others

without delay as the earlier the intervention, the

– whether they have increased operating costs

more likely losses are minimised. Remember,

that may impact their viability – whether they have trading restrictions risks – whether they are selling discretionary items – whether they are vulnerable to technology disruption 20 AICM Risk Report 2021

insolvency practitioners have a responsibility to creditors to achieve the best outcome. By engaging with the insolvency process, particularly during a voluntary administration, and building a relationship with the insolvency practitioner, you have a better understanding of the process

Analysis & Commentary


and how to maximise the outcome with the least

hesitate to use, will result in more assertive

disruption to your business.

creditors getting paid before you.

If you have debtors showing signs of financial

When dealing with the clients/customers keep

distress, Insolvency Intelligence for Credit

in the mind following to help you readjust:

Managers can assist you with the appropriate “next steps” both prior to an insolvency appointment or following an insolvency appointment.

How to bring your clients back to ‘business as usual’

z The expansion of the ATO’s director penalty regime and the deferral of rent (which may be subject to personal liability) and financing commitments may have devalued your personal guarantee and changed the risk profile of your customer. z You have options and do not have to accept

For many businesses, returning to ‘business as

compromise offers without being given

usual’ will involve both a financial and mindset

sufficient justification.

adjustment. Talking to your clients with empathy and understanding is important, however, reminding them of their agreed obligations as part of your business relationship can help persuade them to return to normal trading terms and change the generally relaxed attitude borne out of the temporary lack of enforcement rights. And for the many SMEs on the road to recovery

z Take a proactive stance on encouraging early action on insolvencies to reduce your losses. Anticipating insolvencies is as much about ‘gut instinct’ as analytics, however, your instinct needs ‘feeding’ with information gained from regularly engaging with your clients. z When you suspect a client is avoiding/

but experiencing tighter working capital, ensure

delaying payments and/or not being honest

you make it easy for them to pay you. This is

and transparent about their situation, keep

where accurate invoicing and account statements

in mind that trade credit is a privilege, not

will again become important.

a right, and that you can ask for supporting evidence on financial performance to justify

It’s a time of change for credit professionals too

providing credit and continuing credit. I hope these strategies will smooth bumps

Just like your clients, you will need to adjust

in the road ahead – and help you bring your

back to pre-COVID business relationships, with

client relationships back to the future – 2021

available powers of enforcement which, if you

and beyond!

“For many businesses, returning to ‘business as usual’ will involve both a financial and mindset adjustment. Talking to your clients with empathy and understanding is important, however, reminding them of their agreed obligations as part of your business relationship can help persuade them to return to normal trading terms and change the generally relaxed attitude borne out of the temporary lack of enforcement rights.” Analysis & Commentary

AICM Risk Report 2021 21


2020 Australian new business scorecard: four for one Simon Bligh CEO illion Localism, online and new consumer behaviours all

closed their doors in 2020, marking a 3 per cent

headlined strong new business growth last year.

difference from 2019’s 58,000 closures.

More than four new businesses were established

Bushfires and the pandemic reset Australian values and behaviours driving a rise in localism

for every one that closed in a pandemic-led 2020 as Australians were driven online and became more emotionally connected to provenance and localism trends in their shopping and consumption

Australian consumers became “more mindful”

behaviours. 2.8 million registered businesses now

as a result of the events of 2020 driven by both

serve Australians – a 3.5 per cent increase on the

the pandemic and the Black Summer bushfires.

2.7 million open 12 months previously.

McKinsey research reveals that this year, over half discovered “new shopping behaviours”, more than

illion’s ‘New and Failed Businesses Australia 2020’

30 per cent “tried new brands” and over two in 10

report reveals almost 240,000 new businesses

“tried new retailers, stores and websites”.1

opened their physical or virtual doors between January and December 2020, growing almost

This was a fundamental shift in shopping behaviour

5 per cent on the 227,000 new businesses

and preferences that saw many existing businesses

created in the previous 12 months.

pivot and entrepreneurial start-ups launch at speed. But it also forced others to a halt, particularly those without an agile online and delivery strategy.

By comparison, almost 56,000 businesses

Open and closed businesses (5 years) 35,000 30,000 25,000 20,000 15,000 10,000 5,000

Open

22 AICM Risk Report 2021

De c20

0 -2 Ju n

19 De c-

9 -1 Ju n

8 c1 De

8 Ju n1

7 c1 De

-1 7 Ju n

16 De c-

6 -1 Ju n

15 De c-

5 -1 Ju n

De c-

14

0

Closed

Analysis & Commentary


While new business openings in Australia

through the pandemic with a lower unemployment

generally rise and fall in a consistent seasonal

rate than the less-pandemic affected states of

pattern (reaching their highest point at the start

Queensland and Tasmania.

of the financial year and dropping to their lowest around December), illion’s 2020 data suggests

The Reserve Bank’s December statement found

April’s dearth of new economic entrants was

recent data was “generally better than expected”

caused by would-be entrepreneurs exercising

but addressing unemployment is an “important

caution as the country descended into COVID-19

national priority” and “it will not be until the

lockdowns.

end of 2021 that the level of GDP reaches the level attained at the end of 2019”. But resilient

June’s peak was higher than the past two years

Australians did bunker down economically as well

and remained so through September. Importantly,

as physically as they saved their money. Household

while Victoria’s second lockdown had a sharp

bank deposits grew by $110 billion through the first

impact on new businesses entering the market,

10 months of 20202 giving promise to spending

there was no substantial increase in the number

locally as we navigate out of the pandemic.

of failed businesses; and as the state reopens it is playing catch up to the rest of Australia’s new business growth.

Resilience plans and agile strategies are critical for new businesses in the next five years

Pandemic-fuelled stimulus has helped facilitate a more buoyant economic recovery plan

illion research shows that businesses aged between

Despite some states going through protracted

higher in those crucial first five years and the

lockdowns and severe limits on business

anomaly that is 2020 is the likely culprit behind

operations, the growth in new business openings

the higher rate of spikes in closures witnessed in

shows JobKeeper and other stimulus initiatives

January (bushfires) and April (COVID-19) than in

doing exactly what they were intended to do. In

previous years. Outside of this range, the older a

fact, recent statistics showed Victoria has come

business is, the less likely it is to fail as they become

two and five years are the most likely to fail in the first five years. Their failure rate is significantly

Open and closed businesses (YoY) 30,000 25,000 20,000 15,000 10,000 5,000

Closed 2019

Analysis & Commentary

Closed 2020

Opened 2019

r

De ce mb e

be r

No ve m

er tob Oc

r be pte m

Se

Au gu st

Ju ly

e Ju n

Ma y

Ap ril

h Ma rc

ry rua Fe b

Ja n

ua

ry

0

Opened 2020

AICM Risk Report 2021 23


more stable and accrue more employees. illion’s business size and age data correlates showing that small businesses are most likely to fail while larger businesses steadily become more resilient. Current predictions anticipate Australia’s consumer sentiment index to rise in 2020-21 but

Note: illion’s new and failed business data covers only companies (ACN), and may not align with figures from the ABS, which cover all businesses. We also report only on business failures, for example, external administration, liquidation or involuntary deregistration, rather than all businesses that have ceased operating. For the purposes of this report, “failed” and “closed” are used interchangeably and refer only to these kinds of failures.

remain negative overall driven by continued high

FOOTNOTES:

unemployment and international border closures.

1 J Child, R Gay-Depassier, T Rrüdiger Smith, Getting acquainted with a more mindful Australian consumer, McKinsey & Company, 5 November 2020, accessed 10 December 2020

However, business confidence is expected to recover significantly in 2021-22, as they benefit from loosening COVID-19 restrictions3 meaning

2 S Wright, M Wade, How Australia navigated an economic jolt not seen for a century, The Sydney Morning Herald, 8 December 2002, accessed 10 December 2020

a sharp focus on continued resilience plans in complement to agile strategies for post-pandemic growth is crucial.

3 IBISWorld, The Global Economic Outlook for 2021 – Australia, 5 November 2020, accessed 10 December 2021

Open and closed (Vic vs NSW) 10,000 8,000 6,000 4,000 2,000

Vic Open

Vic Close

20 c-

0 -2 Ju n

De

20 c-

0 -2 Ju n

NSW Open

De

19 cDe

-19 Ju n

18 cDe

-18 Ju n

17 cDe

-17 Ju n

16 cDe

Ju n

-16

15 cDe

-15 Ju n

De

c-

14

0

NSW Close

Closed by age

Ja n1 Ap 5 r-1 5 Ju l-1 Oc 5 t-1 Ja 5 nAp 16 r-1 6 Ju l-1 Oc 6 t-1 Ja 6 n1 Ap 7 r-1 7 Ju l-1 Oc 7 t-1 Ja 7 n1 Ap 8 r-1 8 Ju l-1 Oc 8 t-1 Ja 8 n1 Ap 9 r-1 9 Ju l-1 Oc 9 t-1 Ja 9 n2 Ap 0 r-2 Ju 0 l-2 Oc 0 t-2 0

4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

<2 years

24 AICM Risk Report 2021

2 to <5

5 to <7

7 to <10

10+

Analysis & Commentary


Navigating the post-COVID-19 era

By Brad Walters Head of Product and Rating Services Equifax Australia

If you didn’t know better, it would be easy to

After the GFC hit Australia experienced a 30%

conclude widespread economic shutdowns had

increase in corporate defaults. This was during

been a shot in the arm for Australian businesses.

a period when the RBA had plenty of scope to

At the time of writing, corporate insolvencies

cut interest rates. And when China was eager

are more than 50% lower than pre-Coronavirus

to import lots of Australian resources to use in

levels and are at their lowest overall level in nearly

economy-stimulating infrastructure projects.

20 years. The fall in GDP Australia experienced in 2020

COVID-19’s slow-motion impact

was far greater than that experienced during the

Of course, the dearth of corporate insolvencies

magnitude of the deepest quarterly economic

in 2020 is due to the extraordinary measures

contraction previously on record. Even worse

taken by the Federal Government. Measures

today, there is limited capacity to get the economy

designed to enable Australian business to survive

moving by cutting interest rates and China’s

the pandemic. Thankfully, it now appears the

infrastructure investment has peaked with a

Australian economy has weathered COVID-19

weaker investment outlook in the years ahead.

GFC. In fact, it was more than three times the

better than many were initially predicting. Nonetheless, it appears inevitable corporate insolvencies will “snap back” in 2021.

The new normal The temporary insolvency relief, which included

Granted, the jobless rate didn’t reach double-digit

relief from insolvent trading, as well as extended

levels, but it did reach its highest level in a decade

creditor and statutory demands, expired in

as did the underemployment rate. Private new

December, 2020. This coincided with the largest

capital expenditure is at its lowest level in 10 years.

insolvency changes in three decades with reforms

And, despite all the upbeat commentary of recent

introduced in January 2021. (Among other

months, it remains the case Australia suffered its

things, these reforms allow small businesses to

deepest economic contraction on record, with

access safe harbour protections through a new

GDP collapsing 7% through the June 2020 quarter.

restructuring pathway.)

“Many Australian businesses benefitted in 2020 from the Federal Government paying their wages and topping up their customers’ bank accounts with Coronavirus Supplements. However now with JobKeeper being phased out it’s hard to imagine a more insolvency-generating perfect storm.” Analysis & Commentary

AICM Risk Report 2021 25


z Evidence of dishonoured payments and/or

Many Australian businesses benefitted in 2020 from the Federal Government paying their wages

difficulty paying amounts by due dates, including

and topping up their customers’ bank accounts

statutory debts (e.g. PAYGW, SCG, GST)

with Coronavirus Supplements. However now with

z An overdraft (or other finance facility) at its limit

JobKeeper being phased out it’s hard to imagine a

z Difficulty collecting debts, and/or

more insolvency-generating perfect storm.

z Evidence of poor financial management (e.g. a lack of records)

Equifax estimates corporate insolvencies could be more than 80% higher over the next twelve

Derelict directors

months and anticipates hundreds of thousands of business exits.

Unfortunately the hard truth is that some people do the wrong thing, especially when financially

Don’t get bitten by a zombie business

distressed. A review of corporate insolvencies undertaken before the pandemic revealed that director and officer misconduct was apparent in

A majority of Australian businesses will recover

9 out of 10 external administrations.

from the financial hit they took during 2020, but a significant minority won’t. Those that fall into the latter category are almost certainly now exhibiting

The review also found that external administrator reports often highlighted the fact directors

some or all of these early warning signs:

had reasonable grounds to suspect company

z Financial statements disclosing a history of

insolvency and that, despite clear warning signs,

working capital shortfalls, unprofitable trading

71% of all reported misconduct involved breaches

and/or deteriorating cash flow

of insolvent trading provisions.

Corporate defaults 10,500

8,500 7,500 6,500

Defaults increased 30% over 12 months

5,500

26 AICM Risk Report 2021

9 t-0 Oc

-0 9 Ju n

9 -0 Fe b

8 t-0 Oc

-0 8 Ju n

7

8 -0 Fe b

t-0 Oc

7 -0 Ju n

7 -0 Fe b

6 t-0 Oc

6 -0 Ju n

-0 Fe b

t-0 Oc

6

4,500 5

External Administrations (#)

9,500

Analysis & Commentary


External administrator reports – basis for determining when the company became insolvent (1 July 2018 to 30 June 2019) Reports alleging criminal breach Basis for determining insolvency

Reports alleging civil breach

Number

Percentage

Number

Percentage

Cash flow analysis

14

24.6%

931

19.7%

Trading history analysis

20

35.1%

1,937

41.0%

Balance sheet analysis

38

66.7%

3,170

67.2%

Informed by director(s)

5

8.8%

296

6.3%

Other

27

47.4%

2,683

56.9%

Note: For all reports in this table, the external administrator reported that there was evidence in support of the alleged breach. Source: ASIC Report 645 – Insolvency Statistics: External Administrator Reports (July 2018 to June 2019)

The good news is that companies do not fail

especially throughout the rest of 2021, on the

overnight, and that financial statements and

following three things:

associated records disclose early warning signs enabling people to protect themselves.

1) Due diligence reviews How do you review and onboard customers,

Lessons from external administrator reports Corporate insolvencies impact both secured and unsecured creditors. For the 37% of corporate insolvencies with secured creditors, around one

suppliers and other third parties? Do you apply a fit-for-purpose approach based on the size and scale of your risk exposure?

2) Monitoring and surveillance

quarter had more than $500k debt owed to them.

Do you use commercial alerts, configured

And it was even more concerning for unsecured

to your needs, to apply the right triggers and

creditors, with 38% of insolvencies having more

monitor for early warning signs?

than $250k owed to them, knowing they recover nothing back in more than 92% of all insolvencies. Once again, keeping an eye on the books of high-risk businesses is key in preventing a worst-case scenario. In no fewer than 54% of cases, external administrators find insolvent

3) Strategic risk oversight How are you identifying potential phoenix operators, and how are you evaluating your indirect risk exposure to the credit risk contagion from your accounts’ counterparties?

businesses have failed to maintain appropriate records or keep adequate books.

For those business’ that do want to research potential customers and keep an eye on existing

How to protect yourself

ones, Equifax can provide portfolio reviews,

Want to reduce your risk exposure to customers

assessments and commercial alerts to help in

and suppliers? I’d recommend a laser focus,

identifying those experiencing hardship.

Analysis & Commentary

commercial risk reports, financial viability

AICM Risk Report 2021 27


Rights of retention of title creditors in 2021 Daniel Turk MICM Partner and Head of the Commercial Practice Group TurksLegal Creditors should be aware of how their rights have

How are creditors of the company affected?

been altered with the introduction of the small

z Creditors can sue for unpaid debt and enforce

business restructuring period. Importantly the rights of secured creditors, such as trade suppliers with the benefit of retention of title, have changed. Such creditors have different rights of recovery from clients who have entered insolvency administration depending on the type

judgments z Creditors cannot issue statutory demands for debts less than $20,000. Statutory demands issued must have a compliance period of 6 months rather than 21 days z Creditors can enforce PPSA securities

of insolvency administration. In this article I will discuss the rights under each type of insolvency administration and what creditors need to look out for. The types of insolvency administration I will cover include:

SBRP appointment – restructuring stage A SBRP can be appointed to a company by its directors.

– D eclaration of Intent to Appoint a Small Business Restructuring Practitioner (“SBRP”)

The SBRP must put a proposal to creditors for a

– SBRP Appointment – Restructuring Stage

debt within 20 business days of their appointment.

– SBRP Appointment – Plan Stage

Creditors vote on the proposal within 15 business

– Administration

days.

deal in relation to all pre-appointment unsecured

– Liquidation – Receivership

The company can trade on during this period and the company is liable for any further supply, not the SBRP.

Declaration of intention to appoint SBRP The benefit to the company in filing a declaration is that for three months from filing, the company: z will have relief from insolvent trading for debts incurred during the ordinary course of business z cannot be the subject of statutory demands from its creditors for debts less than $20,000

The time between the appointment and the acceptance or rejection of a plan is known as the Restructuring Stage. During the Restructuring Stage creditors are affected as follows: z Trade creditors are subject to a moratorium on enforcing unpaid debt owing at the appointment date. This includes issuing proceedings and enforcing judgments. z There is a stay on any proceedings on foot.

At the time of writing this article, declarations cannot be lodged after 31 March 2021. 28 AICM Risk Report 2021

z Trade creditors cannot enforce guarantees given by directors

Analysis & Commentary


z There is a moratorium on PPSA secured

Administration

creditors enforcing rights over secured property supplied. z The company is permitted to sell PPSA security stock in the ordinary course of business. The company is not obligated to account to secured creditors out of the sale proceeds.

In an administration scenario, the administrator appointed takes control of the company and after approximately 6 weeks creditors vote as to whether the company is wound up, accepts a deed of company arrangement or goes back into the hands of the directors.

z The company is unable to reduce preappointment debts.

In the administration period creditors are affected as follows:

An important item to note is that the company is

z Trade creditors are subject to a moratorium

not obligated to account to secured creditors for

on enforcing unpaid debt. This includes issuing

the sale of secured stock during the Restructuring

proceedings and enforcing judgments.

Stage. It is possible that the company can use sale proceeds to pay for new stock.

z There is a stay on any proceedings on foot. z Trade creditors cannot enforce guarantees

It may be that the company will seek further supply from trade creditors who are owed money.

given by directors. z There is a moratorium on PPSA retention of

Those trade creditors will need to weigh up the

title creditors enforcing rights over secured

decision whether to provide ongoing supply and

property supplied.

on what terms.

Small Business Structuring Practitioner Appointment – Plan stage In the event a restructuring plan is accepted

z The administrator is permitted to sell PPSA security stock in the ordinary course of business however must pay sale proceeds to the secured creditor.

Liquidation

by creditors, then the following applies to creditors: z The company trades on as usual

During a liquidation, a liquidator is appointed to realise the assets of the business for the benefit of creditors.

z Creditors receive payments in accordance with the plan for their pre appointment debt z Pre-appointment debts are no longer able to be pursued z Secured creditors can claim whatever secured stock remains

In a liquidation, trade creditors are affected as follows: z Proof of debts must be lodged disclosing the debt owed. z Proceedings cannot be issued without the liquidator or Court approval.

It may be that the company will seek further supply from trade creditors who are owed money. Those trade creditors will need to weigh up the decision whether to provide ongoing supply and on what terms. Any ongoing supplies would not be part of a deal relating to pre-appointment debts.

Analysis & Commentary

z Trade creditors can chase personal guarantees given by directors. z Secured creditors such as PPSA creditors with retention of title rights can recover their stock. z The proceeds of sale of secured stock by a liquidator must be paid to the secured creditor. AICM Risk Report 2021 29


Receivership

z Any further supply to the company should be made to the receiver with the receiver

A receiver may be appointed by a secured creditor

personally liable for payment

to take control and protect, collect and sell some

z Secured creditors such as PPSA creditors

or all of the company’s assets to repay debts owing to that secured creditor. In a receivership

with retention of title rights can recover their

trade creditors are affected as follows:

stock

z Trade creditors can still issue proceedings or

z Any sale of secured stock by the receiver must

enforce judgment for unpaid debt

be accounted to secured creditors

Creditors’ rights re PPSA retention of title rights The following table summarises creditors’ rights as to PPSA retention of title in the various administration periods. Please contact me at daniel.turk@turkslegal.com.au if you would like a printable version of this reference table.

Type of insolvency administration

Effects on creditors

Declaration of Intend to appoint

z No limitation on creditors enforcing PPSA rights

Small Business Restructuring

z Company can sell stock in ordinary course of business

practitioner (“SBRP”) Appointment of SBRP (Restructuring Stage)

z Secured creditor is unable to retrieve its stock without Court or SBRP approval (exception for perishable stock). z Company can sell stock in ordinary course of business. z No express obligations to account for secured creditors on sale of stock by company.

SBRP Restructuring Plan on foot

z Secured creditors can recover goods unless agreed to give up rights in the plan.

Administration

z Secured creditors are unable to retrieve their stock. z Administrator can sell the stock in ordinary course of business. z Administrator must account to secured creditors out of sale proceeds of security stock but must account to secured creditors.

Liquidation

z Secured creditors can retrieve their stock. z Liquidator must account to secured creditors on any sale of secured stock.

Receivership

z Secured creditors such as PPSA retention of title creditors can recover their stock. z Any sale of PPSA stock by receiver must be accounted to secured creditor.

30 AICM Risk Report 2021

Analysis & Commentary


Leveraging data to provide answers to risk Kirk Cheesman MICM Managing Director NCI NCI gather statistics and

Figure 1: ASIC External Administrations (2019 v 2020)

information from a number of key areas to help us paint a picture of the current Australian landscape in respect to credit and insolvency.

900

Generally, these indicators will

800

mirror the sentiment of businesses

700

around the nation. Over the past

600

gathered has been interesting to

500

2021 is shaping up to be equally as

300 200

unusual.

us t pt em be r Oc to be r No ve m be r De ce m be r

Au g

Ju ly

e

Se

l 2019

there be? and;

Ju n

Ma y

h

ril Ap

ua

z How many insolvencies will

y

for the coming year are:

ar

0 ry

The biggest questions we have

Ja n

100

Ma rc

reporting, 2020 was unusual, and

400

ru

to claims, collections or overdue

Fe b

say the least. Whether in relation

Number

12 months, the information we have

l 2020

Source: ASIC

z When will these insolvencies

Figure 2: ASIC External Administrations and NCI Claims (2019 v 2020)

occur?

to a Statutory Demand from 21 days to 6 months, has had a big impact for many wanting to progress recovery actions. This has resulted in a decline in collection actions and insolvencies, for many, increasing the uncertainty that is ahead in 2021. Data shows that although this is the case overall, there are industry sectors that are in better places than others. Data collected from

900

220

800

196

700

171

600

147

500

122

400

98

300

73

200

49

100

24

0

Jan Feb-18 Ma -18 Ap r-18 Mar-18 Juny-18 Ju -18 Au l-18 g Se -18 p Oc -18 No t-18 Dev-18 c Jan -18 Feb-19 Ma -19 Ap r-19 Mar-19 Juny-19 Ju -19 Au l-19 g Se -19 p Oc -19 No t-19 Dev-19 c Jan -19 Feb-20 Ma -20 Ap r-20 Mar-20 Juny-20 Ju -20 Au l-20 g Se -20 p Oc -20 No t-20 Dev-20 c Jan -20 -21

the extension of time to respond

Companies Entering External Administration

to Statutory Demands, in particular

l Companies Entering External Administration

Claims

The Federal Government’s changes

0

l Claims Source: NCI and ASIC

our clients show that in multiple

Analysis & Commentary

AICM Risk Report 2021 31


cases there has been an increase in turnover for

settled $74.2m worth of claims, 16% more than

the 2020 year in relation to previous years.

in 2019. The graph also points out that there has been an incredibly slow start to incoming claims

As a whole, Figure 1 shows the number of

in 2021, a 56% and 45% reduction in both January

companies that entered External Administration

and February respectively.

(EXAD) in 2020 against those that did in 2019. We predict that this gap which has been created,

While these statistics are particularly useful

between a normal year (2019) and 2020, will, at

when looking at historical trends, the modern

some point, “normalise”, resulting in an increase in

credit professional requires information that will

insolvencies.

allow them to decide the credit worthiness of a customer today. Of course, we can use these

What this means directly for business, our clients,

as indicators for future trends. For example, we

our insurers and us, is that this increase in the

expect these insolvency actions will have a longer

number of insolvencies will result in an increase

“tail” than first expected, with increased insolvency

in claims. Figure 2 illustrates that, generally, when

actions taking place late into 2021 and through to

there is an increase in the number of companies

2023. Normalisation will occur but this delayed

entering EXAD, there is also an increase in claims.

effect is the result of Government intervention and so called “debt hibernation”.

One of the most unique metrics we regularly report on is incoming claims, with respect to both

Figure 4 is a simple illustration that shows how

the number and value. While Figure 3 shows that

an invoice issued in October 2020, can result in

the number of incoming claims was far less in

an insolvency in May 2021, 7 months later. The

2020 than in 2019, a 32% reduction, we in fact

worrying unknown about this scenario is that no

Figure 3: Claims received (number and value) 26M

220

24M

203

22M

186

20M

169

18M

152

16M

135

14M

118

12M

102

10M

85

8M

68

6M

51

4M

34

2M

17

0

ry ua

Jan

b Fe

ry rua

l 2019 ($)

rch Ma

l 2020 ($)

32 AICM Risk Report 2021

l

ri Ap

y Ma

ne Ju

l 2021 ($)

ly Ju

t

Au

s gu

m pte Se

r be

l 2019 (#)

to

Oc

r be

r be

r be

0

m m ve ce De No

l 2020 (#)

l 2021 (#)

Source: NCI

Analysis & Commentary


one knows the true impact that the removal of the JobKeeper program

Figure 4: Delayed debt and cashflow example

will have on those businesses currently relying on it, these impacts may not be seen for many months or even years.

Their debt is within trading terms.

The money owed to Company B is now overdue.

The job keeper program ends on March 28.

Company A cannot pay the $40,000 and enter External Administration.

NOV 20

JAN 21

MAR 21

MAY 21

On a monthly basis, trade credit insurance clients are required to notify us of any accounts that fall out of terms as this may impact their cover. Debts that are categorised as 90+ days are at the highest risk of becoming delinquent. Our data in Figure 5 shows that for the last 4 months of 2020, debts in this

OCT 20

DEC 20

Company A is utilising the Government’s JobKeeper program.

Company A have not yet paid the $50,000 owed to company B.

category have been higher, in terms of value, when compared with the same period in 2019. This means is that there is a higher chance these overdue debts will become claims in the coming months, either due to an event of insolvency or Protracted Default. It gives us a fair indication that businesses will face

FEB 21

APR 21

JUN 21

Company Company Company B A make a A can no are forced to $10,000 part longer rely on write off the payment JobKeeper, $40,000 plus to satisfy their cashflow costs. Company B. is strained. Other Company B creditors are issue a final also out of demand for pocket. the remaining $40,000.

They are invoiced for $50,000 worth of goods from Company B.

challenges as we move through 2021 and prudent credit management will be crucial.

Figure 5: Overdue Reports, average 90+ day amount

With the data at hand suggesting an imminent increase in insolvencies, credit professionals can use this knowledge to their advantage by

100K

staying alert and getting the most up-to-date information possible.

80K

monitoring service or likeminded industry professionals, this data will prove valuable as more and more insolvencies occur throughout

Avg Value

Whether via a third-party company

60K

40K

Australia. 20K

As the credit profession evolves, interpreting, evaluating and managing these company credit risks will help businesses reduce their risk of the

ry ry rch ua rua Ma Jan Feb

ril

Ap

y Ma

l 2019

e

n Ju

ly Ju

r r er be be er st gu temb ctob vem cem u A ep O No De S

l 2020

Source: NCI

non-payment of invoices.

Analysis & Commentary

AICM Risk Report 2021 33


Celebrating the positives and confronting the challenges in 2021 Patrick Coghlan

An economic and industry overview by Patrick Coghlan MICM and Harley Dale, CreditorWatch

Harley Dale

the time it takes to pay their bills by 50% in February 2021, compared to February last year.

At the time of writing, the COVID-19 vaccine

That is a move in the right direction.

has only recently started being rolled out, and JobKeeper and JobSeeper are due to end on March 28th. These factors will contribute to an

The industries to watch

uncertain economic climate that Australians will be

For other industries, 2021 is shaping up to be a

forced to confront in 2021.

watershed year in terms of performance and growth.

CreditorWatch data has been a key business

Parts of the agricultural sector are really struggling

barometer during these challenging times. Overall,

under the weight of a severe shortage of seasonal

this information has revealed an improvement in

workers, due to COVID-related travel restrictions.

the credit environment for Australian businesses, which is testament to the strong fiscal support

The sector reports a 25-day delay in payment

provided by both federal and state governments.

times in February 2021, the highest the figure has been in 9 months. There is no rapid domestic

Good news stories

solution. Supply shortages mean upward pressure

From an economic perspective, Australia set the

households’ hip pockets.

on fruit and vegetable prices, directly hitting

standard in handling the pandemic. In the middle quarters of 2020, the adverse impacts from

Some key insights on the state of the construction

COVID-19 were projected to be much worse than

industry, even with record-low interest rates and

what has eventuated so far.

government stimulus offered to boost the sector: z The construction industry reports a 39%

The labour market, for example, is performing

increase year-on-year in the time it takes to

much better than initially feared. The

pay their bills, from 33 days overdue to 46

unemployment rate fell to 6.4 per cent in January

days.

this year, compared to a peak of 7.4 per cent in

z The commercial building sector is also under

June 2020. The Reserve Bank of Australia initially

strain, especially in areas such as CBDs and

forecasted a peak above 10 per cent.

major regional areas where office spaces were essentially abandoned for months.

We’ve seen extraordinary resilience from many of Australia’s key industries to not just stay afloat

It will be interesting to see if Australia ever

during 2020, but thrive and adapt.

returns to the 5-day working week in the office or continues to offer a flexibility to employees.

For example, despite being battered by lockdowns and social distancing limitations, the

We think everybody likes and appreciates the idea

accommodation and food sector has decreased

of face-to-face interaction. We do not buy the

34 AICM Risk Report 2021

Analysis & Commentary


idea that everybody will have a ‘work from home’

It doesn’t look like there will be a huge

mantra as their base, or that many employers

cliff, but unfortunately, there will still be a

will want them to. All the small businesses that

considerable number of business closures,

operate in CBDs or major regional centres are built

many businesses have continued operating

around a five-day working week.

under the camouflage of government support but, sadly, are simply unviable with or without

Small businesses are the lifeblood of the Australian

that support. There will be an increase in

economy. “They find themselves being paid late

insolvencies and court actions, but that is likely

by larger business while confronting a reduced

a two-year process at best.

demand for their goods or services. When JobKeeper and JobSeeker end, we will face a

“No one knows what to expect, but ABS, RBA and

crucial two-quarter period in June and September

CreditorWatch data suggests we are in better

where we will need to assess whether there is any

shape in the March 2021 quarter than what was

fall-out sufficient to temporarily restrain Australia’s

initially feared.

COVID-19 economic recovery. A substantial number of businesses will emerge

A 2021 outlook

from COVID-inflicted 2020 leaner and meaner,

There was concern in 2020 that Australia would be

be crucial to find the right balance between

inundated by a tsunami of business insolvencies

celebrating the positives as well as confronting

when government financial support ends, but

the setbacks. We need to have a year where

CreditorWatch thinks it won’t be as dramatic as

we recognise the risks, but do not become risk

first thought.

averse.

more efficient, and more creative. In 2021 it will

Number of days payment is overdue, by industry 80 70

Number

60 50 40 30 20 10

na nd

po Re rt, tai Fo ati Po l od on sta Me S e l rvi an dia ce dW an s d a re Te Fin ho lec an us om cia ing Re la m nt u n Pr al, nic dI of Hi ns ati es rin ur sio on ga an s na ce nd l, S S Re cie er vic al nt Es ific es Ad tat an m eS dT ini er str ec vic ati hn es ve ica an lS Pu dS er bli vic up cA es po dm r tS ini er str vic ati es on Ed He an u dS alt ca hC afe tio na are ty n an dT dS r ain Ar oc ing ts ial an A dR ss ist ec an re ce ati on Se rvi ce Ot s he rS er vic es

de Tra

n les ale

ho W

ati o

ns

od

m

m Ac co m

Tra

n February 2020 n February 2021

Inf or

Co n

str

uc

tio

ce s

g

rvi

rin tu

Ele

ctr i

cit

y, G

as

Ag ric u

ltu

re ,

,W ate r

an

Fo re str y

dW as te

Se

g

fac

nin

an

Ma nu

dF

Mi

ish

ing

0

Industry

Analysis & Commentary

Source: CreditorWatch

AICM Risk Report 2021 35


Our PEOPLE Board members

South Australia

Trevor Goodwin LICM CCE

Lou Caldararo LICM CCE

Alice Carter MICM CCE

National President

VIC/TAS Director

President

Rowan McClarty MICM CCE

Gail Crowder MICM

Brianna Harris MICM

Gemma McGrice MICM

Byron Savage MICM

WA/NT Director

SA Director

Professional Development

Young Credit Professional

Treasurer

Peter Morgan MICM CCE

Decia Guttormsen MICM CCE

James Neate LICM CCE

NSW Director

QLD Director

CCE

Debbie Leo MICM

Clare Venema MICM

Consumer Director

Publications

36 AICM Risk Report 2021

Neil Fennell MICM

Western Australia/ Northern Territory

Vice President

Travis Olsen MICM Professional Development

Troy Mulder MICM CCE

Raffaele Di Renzo MICM CCE

President

Vice President

Jeremy Coote MICM Publications and Media

Kevin Allen LICM Sponsorship


Queensland

New South Wales

Victoria/Tasmania

Roger Masamvu MICM CCE

Stacey Woodward MICM

Balveen Saini MICM CCE

Theresa Brown MICM CCE

Sherif Hussein MICM CCE

Catrina Galanti MICM CCE – Vice

President

Vice President

President

Vice President

President

President, Professional Development & Events

Fiona Doherty MICM CCE

Michelle Kirkby MICM

David Hunt MICM CCE

Rachael Hurrell MICM CCE

Michelle Carruthers MICM

Robyn Erskine MICM

Professional Development

Professional Development

Treasurer

Sponsorship

Publications

Legal and Insolvency

Merv Mahoney MICM CCE

Ashleigh Mason MICM CCE – Young

Grant Morris LICM CCE

Sam Pearlman MICM

CCE and Membership

Credit Professional, Events and Pinnacles

CCE

Events

Carly Rae MICM CCE

Maria Schandl MICM CCE

James Smith MICM CCE

Treacy Sheehan MICM

Marketing

Women in Credit

Events and Professional Development

Events and Women in Credit

Arthur Tchetchenian MICM CCE

Kimberley Watts MICM CCE

Steven Staatz MICM CCE Professional Development

Ricky Forster MICM Consumer and Membership

Alan Izra MICM Regulation and Legislation

Md Farhan Hossain MICM Treasurer

Brian Kay FICM CCE CCE

Amaran Navaratnam MICM CCE

Mary Petreski MICM CCE – Professional

Young Credit Professional

Development Metropolitan and CCE

Rebecca Roberts MICM – Young Credit Professional

AICM Risk Report 2021 37


Level 3, Suite 303 1-9 Chandos Street St Leonards NSW 2065 PO Box 64 St Leonards NSW 1590 Tel: 1300 560 996 Fax: (02) 9906 5686 www.aicm.com.au


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