“I talked to Treasury or Frydenberg’s office a few times and I strongly encouraged them to remove the trading while insolvent laws.

“I know that there are a number of directors of quite large companies in Australia that would have put their companies into administration because of those rules and only because of those rules.”

Trading while insolvent rules mean that a director can be held personally liable if a company incurs a new debt while it is already unable to meet current debts. They can also be charged with criminal offences over the breach.

In March, Frydenberg followed the advice of the industry and the business community and introduced a suite of measures to safeguard companies and directors (and the economy) from a wave of business failures including easing trading while insolvent laws, loosening safe harbour rules, and increasing the minimum requirements for statutory demands that creditors could make on a company.

That program, coupled with the economy-saving JobKeeper program, which paid companies $1500 to keep workers on, saw the number of corporate failures in Australia in 2020 fall by as much as 70 per cent. (Later in September, the government brought in rules to help micro businesses and sole traders use US insolvency rules to cap fees paid by companies to insolvency businesses and leave the keys of the company with directors.)

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Korda, whose firm ramped up its consultancy work in 2020 advising Bain in its bid for collapsed carrier Virgin Australia and assisting Myer and David Jones on its leases, says the package of relief measures worked well but says only some of those changes should be kept in place permanently.

“I think they should continue the personal liability and the criminal liability relief under trading while insolvent rules. I’ve been saying for 10 years that should be removed,” says Korda who counts Network Ten, Ansett Airlines and Arrium as just some of the major insolvencies he’s handled.

“What we should have is stronger directors’ duties not to trade whilst insolvent.”

Korda says the government needs to remove its pandemic rules on statutory demands that increased the time a company had to respond to a demand to six months from 21 days and from $2000 to $20,000.

Korda is seen as one of the frontrunners to replace Eddie Maguire at Collingwood.

Korda is seen as one of the frontrunners to replace Eddie Maguire at Collingwood.

“That needs to be wound back because people are using that not to pay their debts,” he says, adding there is a significant flow-on effect of financial stress on businesses working with another business that is not paying its debts. “The creditors can’t clean it up,” he says.

Yet during this quieter than expected year for the insolvency trade, Korda found himself in the press quite a bit, especially after Collingwood Football Club president Eddie McGuire succumbed to pressure and announced he would leave the club. Korda is seen as one of the frontrunners to replace the entertainer.

Korda politely declines to comment on a range of questions on the topic – does he want Maguire’s job? How would he handle the rolling series of controversies caused by McGuire’s frequent gaffes? What about the lawsuit brought against the club and the league by former player Héritier Lumumba over alleged racist abuse?

Given that McGuire is still in the chair at least for another six months, Korda prefers to talk about the improvements to the club’s balance sheet during his tenure as a director.

“Around 2008, Collingwood had net assets of $500,000, it had debt to the banks of $15 million, and we had a loss-making poker machine venues. Over the years, we restructured the poker machine business and got it back to profitability.

“We were successful on the field particularly 2009, 2010 , 2011 – it helps financially if you are in the finals and win a grand final – and we built the Glasshouse entertainment area at Collingwood.

“When we sold our poker machine business in 2018, I formed an investment committee and we invested those funds with asset allocations in the stock market, property and interest bearing securities.

“The combination of all that means we now have net assets of $42 million and no debt. And within that $42 million we have a future fund of $17 million.”

But Korda is here to talk insolvency, restructuring and what will happen when the government support like JobKeeper runs out in March.

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“Obviously, that will just mean that some of the companies that probably should have been put in liquidation will be now,” he says.

“We’ve still got a long way to go to sort out the landlord debt that hasn’t been paid. People have deferred but they haven’t paid, so there’s still a day of reckoning coming for many groups.”

“That will end up with lawyers at 20 paces for quite a while,” Korda predicts.

But now there’s a potentially worse scenario than the ‘cliff’ businesses face when government support runs out with suggestions a fresh wave of the virus will hit Australia in March and there’s already a fresh outbreak in NSW.

“If you look at Victoria for an example, you can’t afford for that to happen again,” he says. “It’s just really worrying.”

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