Lenders’ patience running out – More liquidation and Voluntary Administration to come

THE nation’s banks are expected to sever the lifelines of more crippled companies.

The collapse of Allco Finance Group and likely demise of ABC Learning Centres signals the start of moves to clean up the mess created by the 15-month financial crisis.†

One senior banker said the first half of 2008-09 loomed as a “big write-off period”.

The rapid deterioration in the global economy in the past month†- reflected in Treasury’s decision yesterday to cut Australian growth forecasts for the next two years†- has made it much more difficult for companies to trade out of their difficulties and cut asset prices.

And this has hardened the banks’ stance against distressed companies.

Rather than letting these problems linger into 2010, there will be an effort to† clean the decks now and realise whatever can be realised for an asset now as it will be more than what you will get for it†down the track.

The financial crisis is†now starting to hit the real economy.

Although it was the Allco directors who†called in the†administrators, sources said the banking syndicate,†had made life extremely tough for the company’s directors and effectively forced the issue.

ABC child care is probably suffering the same bank pressure however it is likely that the directors will be the ones to appoint the†administrators – the appointment of a Voluntary Administrator is considered imminent.

The banks are owed another $3.9 billion by†the Centro property empire. It has been given until December 15 to negotiate another debt repayment extension or perhaps it to will be placeed into Voluntary Administration.

The banks are now looking at longstanding problem loans and bringing them†to a head. Accordingly, we can al expect to see more liquidations and voluntary administration in the year ahead.

If you are experiencing difficulties and need to know and understand your options, call Liquidation Direct for free, confidential insolvency advice 24 hours on 1300 767 525.