A week after seven major aged care organisations called on the Government to offer a $1.5 billion lifeline to the sector for the next six months, there is still no word on whether the Government is considering extra funding for operators.
That is $8.2 million a day that the sector says it needs to survive the pandemic – now.
In the meantime, Ansell Strategic has warned insolvencies will start in mid-May – just three weeks from now. There has already been one major default from pre-COVID times.
It also appears increasingly likely that this situation will extend beyond six months – increasing the burden on providers for the next 12 months.
At what stage should board members be asking themselves if they need to pull the pin?
We asked Russell Kennedy Principal Anita Courtney if aged care boards are breaking the law if they are operating at a loss.
Anita says while it is not against the law to be operating at a loss, it is to be trading insolvently – and the same rules apply to aged care operators.
“This only applies to companies; however, there are similar provisions in some states that apply to incorporated associations. Providers who are concerned about their financial position should seek advice,” she said.
Anita added that while ASIC rarely takes action against companies for trading insolvent and are even looking at loosening up the laws here, board directors can be personally liable for losses and asked to tip in to pay creditors.
Do you know at what point your organisation would be insolvent – and do you have a plan if it happens?