COVID 19 – ARITA INFO SHEETS FOR DIRECTORS, ACCOUNTANTS AND BUSINESSES
Information for Directors
Given the current impact of the COVID-19 pandemic, there is a strong likelihood that businesses’ liquidity will be adversely impacted. Ensuring that the challenges to liquidity do not move into a shortage of working capital which is unable to be overcome, is key to maintaining solvency during this period.
Below is a information sheet published by ARITA, it gives an overview of:
Directors’ duties when a company is financially distressed.
Determining if a company is insolvent.
The Federal Government’s temporary relief for financially distressed businesses.
We know that the impact of the last bushfire season and now Covid-19 is causing significant distress to business. Indeed, for many businesses, cash flow has slowed to a trickle or even stopped completely.
It’s really important to realise that a lot of people are in the same boat at the moment, and generally through no fault of their own. So, don’t see this as a personal failure. But do get proper, qualified advice as quickly as you can.
The law requires that directors get advice from an appropriately qualified adviser. As a client’s first point of contact, accountants can assist their clients with ensuring the financial information is in order. When it comes to getting specific safe harbour advice, your client is going to need to speak to an insolvency expert.
The ARITA Info sheet provides more detailed advice.