NSW insolvency news: Businesses liquidated amid COVID-19

Three clinics in the north coast’s Happy Smiles Dental chain – in Yamba, Evans Head and McLean – have gone into liquidation but hasty negotiations are under way this week to get them out. FIND OUT THE OTHER COMPANIES THAT HAVE FOLDED HERE

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Coronavirus has already sent NSW businesses to the wall but experts say the real “tsunami” of company insolvencies will hit once stimulus measures wear off.

Companies have grabbed six-month loan deferrals from their banks and signed up for the government’s $130 billion Jobkeeper scheme to keep staff on the books.

But Andrew Spring, partner of insolvency firm Jirsch Sutherland, warned the measures would in many cases delay the inevitable while debt obligations and staff entitlements simply accrued as the business hibernated.

“There will be an increase, the question is do they come as a wave or a tsunami?” Mr Spring said.

Anthony Elkerton of O’Brien Palmer said inquiries from distressed businesses had actually dropped since the COVID-19 outbreak as some companies, understandably, did what they could to avoid insolvency.

“If the bank’s deferring your loan and the ATO is not putting pressure on you ... no one is pushing you that way,” Mr Elkerton said.

HAPPY SMILES TRIES TO AVOID FROWN

Three clinics in the north coast’s Happy Smiles Dental chain – in Yamba, Evans Head and McLean – have gone into liquidation but hasty negotiations are under way this week to get them out.

“Because of the COVID-19 restrictions, ultimately their revenue just dropped off a cliff,” liquidator Andrew Spring said.

“Dental surgeries as a general rule are really struggling under these conditions. They can’t take on any elective elements, only emergencies.”

But the arrival of the $1500-a-fortnight Jobkeeper package has given cause to revive the business until a buyer can be found.

“The process we’re undertaking is trying to turn liquidation into voluntary administration, the objective is to provide better opportunities for the business to survive post this, one option is Jobkeeper,” Mr Spring said.

He said the dental industry could bounce back as soon as governments relaxed isolations restrictions.

“The revenue tap effectively gets turned back on, people go back to the dentist as they normally would,” Mr Spring said.

Dentist Dr Santosh Joy, who helped set up Happy Smiles Dental, said the government money could pay for nurse and administration staff until full trade began again.

“(The dentists) are all staying put, things will begin again once we get out of this liquidation process,” Dr Joy said.

“The Jobkeeper package is a life-saving scheme.”

Two other clinics in the Happy Smiles Dental chain in Grafton and South West Rocks have not been placed into liquidation.

RESTAURANT GETS THE BILL

The trendy Circular Quay incarnation of restaurant chain Salt Meats Cheese has shut its doors and the liquidator now in charge wants to make one thing clear – coronavirus did not kill it.

Adam Preiner of Integra Restructuring and Insolvency said Popina Kitchen, trading as Salt Meats Cheese – Circular Quay, had run up tax debt and recently been sold, he just wasn’t sure who bought it.

“There was a significant tax debt that wasn’t paid and I’m still waiting for documents from the directors in relation to that,” Mr Preiner said.

The Salt Meats Cheese restaurant at Circular Quay has been wound up by the ATO.

“I’m still waiting for a sale contract to see who it was sold to.”

The Australian Taxation Office wound up the “classic-meets-contemporary Italian” restaurant on March 18.

“The ATO would have … issued a statement of demand to make payment. If they haven’t made payment they would have started winding up proceedings in the federal court,” Mr Preiner said.