Bankruptcy Due to Lockdown in Sydney
With the spread of the delta variant, lockdowns are once again being imposed all over the world. Australia recently reinstated an extended lockdown in Sydney to stop the virus from further spreading. While this measure is integral for the health and safety of the people, many businesses are bearing the brunt of these lockdowns.
Multiple small and even medium-sized businesses are facing a bankruptcy crisis. Restrictions are getting stricter all over the city to discourage people from going out. Companies are frantically finding ways to stay afloat, but some are on the brink of bankruptcy.
Lockdown in Sydney
As Sydney records its high daily count, Australia has expanded the lockdown in one of its biggest cities. The extended lockdown in Sydney is feared to cause a significant financial hit. It is estimated that Australia is expected to face around a $7 billion loss due to this lockdown.
The cafés, restaurants and catering industry alone is estimated to lose about $700 million, putting multiple businesses at risk of bankruptcy. The companies already suffered brutal financial losses from the start of the pandemic. However, with the cases doing down, business owners were hoping to get back on track.
Unfortunately, the spread of the delta variant and increase in cases in Sydney resulted in the city-wide lockdown to keep the people safe. While the larger businesses can still handle this blow, this lockdown has created a grave concern for smaller and medium-sized companies, as many are on a brick of bankruptcy.
Things to Avoid Before Going Bankrupt Due to the Lockdown
If you are facing bankruptcy due to the lockdown, here are the main four things you need to avoid doing to prevent further problems:
1. Use Credit Cards
The most crucial step you need to take in this situation is to stop using your credit cards. It might be tempting to make small purchases, like fuel and food, the outrageous fees of these cards would make it harder for you to make repayments.
Moreover, making bigger purchases knowing you will be going bankrupt soon can be considered fraud. Maxing out your cards before declaring bankruptcy would put you in a worse position once creditors start their investigations.
2. Repay Creditors
When facing uncontrolled debt, avoid repaying the creditors before you declare bankruptcy. It might seem reasonable to settle the debt you can. It can actually cause more trouble for you. If you repay one creditor over another, it might be considered a ‘preferential transfer’ that could attract legal action, ultimately delaying your bankruptcy filing.
3. Conceal Information or Lie
Never lie or conceal any information linked to your financial situation. By law, you are obliged to provide detailed and accurate information about your expenses, debts, income, and assets when you file for bankruptcy. Failing to do so would be taken as misrepresentation, and you can be held liable for criminal prosecution.
4. Move or Transfer Assets
Moving or transferring any asset to a relative’s name to protect it from bankruptcy won’t work. Doing so will not shelter your asset and might even be regarded as fraudulent activity that can lead to criminal repercussions.
Getting Help with Bankruptcy Due to Lockdown
Bankruptcy is emotional, demanding, and complicated experience. Many business owners and individuals end up digging a deeper hole for themselves in the hopes of protecting themselves from bankruptcy. Therefore, ensure you consult a bankruptcy professional to evaluate your situation and determine the right course of action before making any decision.
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