Analysis & COMMENTARY Resilience – using ratings to restore credit confidence By Brad Walters Head of Product and Rating Services, Equifax Australia Brad Walters knows well the risk insolvency poses
– changes that will impact court and creditor
to a set of otherwise adequately weighted credit
wind-ups.”
terms. In addition to insolvency laws being relaxed, As head of Equifax Australia’s Credit Ratings
Mr Walters identified other initiatives that will
business he oversees a continuous process of
provide temporary relief including:
financial diagnosis, assessment and rating of all
z easing of capital requirements
manner of credit risk exposures. And insolvency
z mortgage deferral
poses particular dangers.
z small business debt relief (for those with <$3m in total debt)
“The economic cost of insolvency is significant, with 96% of unsecured creditors estimated to receive less than 11c in the dollar,” Mr Walters said. And he cautioned that those numbers will need adjustment once the full impact of the COVID-19 pandemic can be assessed. “Credit managers are experiencing unprecedented times and possibly being presented with challenges they’ve never seen before,” Mr Walters
z $90b funding facility for ADIs to support SME lending z SME guarantee scheme (50% of loan, up to $250k) z Employer cash support payments (up to $100k) z business investment support (including asset write off to $150k) z other State Govt stimulus (including payroll tax waivers, business grants/loans)
said. “While I would envisage there is strong universal support for tax relief, I also acknowledge there will be some with strong views around other measures, including temporary director relief (from insolvent trading) and higher thresholds and more time to respond to creditor demands 11
“Credit managers are experiencing unprecedented times and possibly being presented with challenges they’ve never seen before,” Mr Walters said. AICM Insolvency Risk Report 2020
