Harbour Masters - safe harbour & restructuring blog

Welcome to Harbour Masters, where we offer insights and updates on the expertise and guidance available for the Directors of companies in need of advice in the face of stiff trade winds. Our updates focus on the critical business topics of restructuring, turnaround, and the availability of the new 'Safe Harbour' provisions, all designed to help companies renew, restructure, and rebuild. 

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Down the Amazon to Retail Safe Harbour?

05-Dec-2017 12:13:37 / by Peter Krejci

With the official start date of Amazon Australia's operations locally being today, the reported fears and apprehensions of Australian retailers over the past decade have now been realised. As the media have built-up talk of the negative impact upon retailers, having seen Amazon's effect upon similar businesses in the US and the UK, we look ahead to the likely benefits to retailers set-up as companies in Australia using the Safe Harbour provisions in the Corporations Act.

Amazon box.jpg For   Australian retailers trading as a company, if experiencing solvency issues as a result of any increased competition from the new market entrant, or for many other reasons, Safe Harbour protection may apply. While much of the media focus on Amazon's move into the Australian market may have focused upon the 'bad news' or hype surrounding the anticipated impact to local retailers, we would say in our experience that any retailer with a good product or service to sell at a good price with great service to a defined market, or those that seek to harness these qualities in their business, can adapt, restructure, and survive - even more so now with the Safe Harbour protections.

Obviously, as with any other company director seeking protections or immunity provided by Safe Harbour laws, the following requirements, as highlighted in our previous blog post 'ARITA releases its Safe Harbour Guidance for Directors', must be successfully addressed:

 

1. Get your accounts and records in order

2. You must get expert help

3. You must properly inform yourself of your company's financial position

4. Develop and implement a restructuring plan for the company

 

If the company's financial position, as informed by the expert, does indicate that Amazon's entrance to the Australian retail market has had a negative effect upon the business, the plan in step 4 should necessarily set out a clear approach to minimising or mitigating this competitive threat as part of any viable restructure.

Such methods of minimisation or mitigation may include:

  • consolidation of product lines/service offerings
  • a move to online selling
  • a move to 'bricks and mortar' retailing
  • hiring employees with a focus on improving service delivery
  • investing in IT to automate and streamline point-of-sale, and/or product ordering
  • moving stock and warehousing functions to a third-party fulfilment provider
  • vertical integration to invest in/buy-out a supplier 

These are just some of the practical ways that a local Australian retailer may plan to benefit their business from the 'Amazon Effect'.

 

Of course, for retailers set-up as sole traders, now might be a time to restructure as a company. Any additional compliance burdens may be outweighed by the benefits from operating through a company, including the availability of the Safe Harbour protections.

 

Contact Us to discuss your retail business and how our expertise could help you take on and beat the Amazon in the market.

 

Topics: Safe Harbour, Directors, Retail, Amazon

Peter Krejci

Written by Peter Krejci

Peter is a registered and official liquidator and a founding principal of BRI Ferrier with over 20 years' experience in corporate recovery and turnaround management. He has extensive experience advising secured creditors and boards of directors on options available to them in dealing with companies in financial distress. While primarily working with medium-sized corporates, Peter's experience extends to organisations of all sizes including public and private companies and government entities.