KEY POINTS:
Australian liquidator Tony McGrath says his firm is gearing up for more work on both sides of the Tasman as the wider effects of the credit crunch force a fresh wave of business failures.
McGrath, of leading Australian insolvency practitioners McGrath Nichols, has handled a number of high-profile collapses including insurer HIH and margin lender Lift Capital.
Lift Capital was one of a number Australian businesses hit by the credit crunch, says McGrath, who was in New Zealand last week paying a call on his firm's local operation.
McGrath Nichols was also liquidator for Absolute Capital, another a direct casualty of the sub-prime crisis and a company to which a number of New Zealand investors were exposed.
But rather than being merely "a blip" as some hoped, McGrath said it was becoming increasingly clear that sub-prime and the credit crunch marked the beginning of a downturn for most economies around the world.
"The early casualties are the higher-risk, highly leveraged, complicated companies, they're obvious victims in any downturn.
"There's been a complete rerating of how banks lend to corporates. It's an old-fashioned credit squeeze. We're seeing it in Australia with entities like Allco, Centro, and MFS and really all that's happening is the banks are now saying, 'If you thought we were going to keep refinancing this debt as and when it becomes due for call over, that's not the case. We now want you to repay that debt'."
McGrath said that while far more Australian companies had been hit so far, the two commodity-reliant economies were closely aligned and likely to get caught up in the same credit problems.
