“I think to be able to thrive in any career or any course of work, you need to first enjoy what you’re doing. I thrive and really enjoy the challenge of the work that I do. I really enjoy the fact that litigation is outcome-based, so you’re seeking to assist a client, whether that be a mum and dad purchaser who’s been stuffed around by an off-the-plan developer or all the way up into an ASX-listed company, you’re trying to assist them in overcoming a difficult situation and trying to achieve results,” he said.  

“And I think that that, in particular, has been a real motivating factor for me to continue working. I’ve never really been an accolades type person; the fact that I’ve gotten to the position I’m in now doesn’t define who I am or define what I do; I just really enjoy what I do.”

Interest rates are set to continue rising along with inflation moving forward, leaving lawyers with an influx of insolvency and bankruptcies.

VIEW ALL

And particularly after a period of unrest and in the face of a potential looming recession, the insolvency space has been no exception to the “uncertainty” the rest of the profession has faced, according to Mr De La Hoyde.

“The effects of some of the measures that they put into place during those two years, I think we’re starting to see the after-effects of that now. For example, providing businesses with payments to assist the businesses to continue to run during that two-year period, all the handouts that small businesses and even larger businesses were provided, based on a decrease in turnover. There were also measures that were in place to effectively put in a standstill arrangement for bankruptcy and insolvency.

“So, the limits to creditors statutory demands and bankruptcy notices increased quite significantly, and the period in which recipients of those documents had to comply with them increased from 21 days to, I think, six months during that year, year and a half. And the effect of that’s twofold,” he explained.

“Basically, the economy should have taken a steep nose dive because there was such a decrease in productivity and not just productivity but also in the retail space and hospitality and all those industries that require face to face, the economy should have taken a deep quick downturn, but the handouts that the government were able to give small businesses and to employees that were stood down for a period of time and also the relaxing of the laws are relating to bankruptcy and insolvency for that time, sort of left a bit of a standstill for that period.”

The after-effect of this, Mr De La Hoyde added, is that now the economy is faced with high inflation.

“Over the past, the RBA has tried to correct that high inflation by increasing interest rates, and we’re still right in the thick of that. A lot of people are still within that two-year period where they might have had fixed home loans, and I think we’re sort of coming to the end of that period, where most people are going to come off that by sort of April and May this year,” he explained.

“We’re certainly seeing an influx of inquiries relating to financial stress and financial strain, and [from] my discussions with a lot of liquidators that we work with, they’re starting to see a lot more inquiries as well. And I think you’re already seeing the effects of it in particular industries, specifically the construction and the property development industries.”

There are also a number of consequences of these after-effects — such as businesses still operating as though they’re still within that standstill period, which will lead to lawyers using different sets of skills moving forward.

“I think that’s just led to a little bit of complacency with a lot of businesses in certain sectors. So, a lot of businesses are leaving it too late to seek advice in relation to restructuring or in relation to seeking guidance in relation to claims that are brought against them. I think not so much by the big lenders at the moment, by some of these second- and third-tier mezzanine lenders who are a bit more predatory. So that’s what I’m seeing at the moment.

“And I’ve had some inquiries with businesses, particularly in the construction space, that have come to us just too late, where they’ve got creditors lined up to the hilt, there’s already wind up at proceedings on foot and they’ve got a number of creditors lined up to sub in once they pay each one-off, and it’s just too much. A lot of businesses are crumbling because of that. And I think we’re in a really interesting time because I think we’re going to see a real influx, not just on litigation and insolvency and bankruptcy side, but also on restructuring,” Mr De La Hoyde predicted.

“I think there’s going to be a lot of opportunities for lawyers to assist clients in restructuring their businesses, negotiating with lenders. I think you’ll see a lot more lawyers using their soft skills, as well as their legal technical skills, in negotiating with various parties to assist their clients in coming out of these difficult times.”

More to come. 

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with John De La Hoyde, click below: