By Ron Browne
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September 13, 2024
Four years after COVID hit, are we seeing the same aftermath as four years post GFC? Alan Kohler, the ABC’s Finance guru raised the question in the first year post the 2020 COVID pandemic, somewhat predicting that the most post COVID insolvencies might come four years later. The bulk of post 2008 GFC insolvencies occurred in 2012 and here we are in 2024 with insolvencies on the rise. Australian Securities and Investment Commission (ASIC) data supports this projected outcome with a 36.2% increase in External administrations (7,742 companies) for the period 1 July 2023 – 31 March 2024, compared to the previous corresponding period. Of these, accommodation and food service industries accounted for 15.2% (1,174 businesses). Some of these have been clubs and many clubs have waved the White Flag, looking to amalgamate with other club to save their local failing operation, thereby avoiding being counted in these stats. In NSW, under the Registered Clubs Act 1976, amalgamations can occur between clubs with similar objects and initially preferring clubs within a 50 km radius of the amalgamating child club. Not all amalgamations are for a white flag club to survive. Many amalgamations have occurred between a really strong, large club and a smaller less powerful club, looking to grow business for both the amalgamating parent club and the child club. Amalgamation options – Growth or Survival As indicated above, the first thought that most people have when they hear the word amalgamation is – another one bites the dust . Another small struggling club has raised the white flag to have a large, stronger club step in and under-gird their operations, yet in the past few years, due to ongoing industry consolidation, many amalgamations have been initiated by a large, financially viable club, looking for growth opportunities outside it’s immediate area of operation.