Small Business Restructure in Hospitality at 19.97c/$

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Small Business Restructure in Hospitality at 19.97c/$.

Small Business Restructure (SBR) in Hospitality

In 2009, our client purchased the hospitality business from family members on their retirement. The COVID pandemic adversely impacted the business due to restrictions placed on trade, which in turn saw the business experience a significant decrease in customer numbers.

Debt

Total debt within this SBR was approximately $190,000 owing to the ATO.

Background

Due to government restrictions imposed surrounding COVID-19, the Company suffered significantly and could not trade for some time.

Post-COVID and on the lifting of government restrictions around trade in the hospitality sector, the business experienced a significant decrease in customer numbers particularly with concerns surrounding COVID among the elderly demographic customer base.

Unfortunately, the Director also experienced severe health complications after receiving the COVID-19 vaccine and was unable to work for a considerable amount of time whilst he focussed on his recovery.

Small Business Restructure Proposal

The proposal provided for weekly instalments over 12 months, making a total commitment of $40,000.

Creditors voted to accept the restructuring proposal, which resulted in a 19.97c/$ return.

Outcome

The business has continued to trade profitably and has taken various steps to improve its position moving forward and to ensure ongoing profitability, including:

The Director is now back to complete time work in the business;
The engagement of a Bookkeeper and a new and reliable accountant to ensure timely communication and management of creditors and other important trading matters with the business;
Creation of accurate and detailed cashflow for the next 12 months, and commitment to updating fortnightly, including reconciling Xero to ensure the ability to track progress compared to the cashflow and budget;
Reviewing marketing and increasing presence on social media to attract new clientele and to re-engage with clientele that may have dropped away since COVID;
Implemented a proactive approach to financial obligations, including regular payments for superannuation, GST, and PAYG, setting aside funds weekly in a separate bank account to ensure they are available when statutory lodgements are due, and
Conducted a detailed analysis of operating expenditure to achieve further cost savings, reducing overheads.

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