Longstanding Canberra retail businesses, Bags To Go, has entered voluntary administration, as its administrators predict further companies could follow the same route as the government prepares to reduce JobKeeper payments.
Bags To Go, along with its affiliated stores Travelite and Trend Bags, entered voluntary administration on July 24.
The stores had been trading in the Canberra region for the past 16 years.
Just one of its stores, its megastore in Fyshwick, remains trading, as does its online store.
Bags to Go, Travelite and Trend Bags had stores across the ACT, including locations in Woden, Tuggeranong and Belconnen.
There were as many as 24 stores operating around the country when the company went into voluntary administration.
Canberra firm Slaven Torline have been appointed as administrators for Bags To Go.
Administrator Michael Slaven said the impact of coronavirus and the ban on international travel had led to the company deciding to go into voluntary administration.
"Since COVID-19, turnover across all of the stores has been reduced by at least 90 per cent," Mr Slaven said.
"Given the nature of the industry [of Bags To Go], international travel bans affect the business in a direct way and that was the main reason for the downturn in trade."
Bags To Go was contacted for comment, but a spokeswoman referred all inquiries to its administrators.
Mr Slaven confirmed that no liquidation had taken place.
An expression of interest campaign for other parties to purchase the business has been launched and will remain open until August 31.
"It's too early to know if there are any interested parties," Mr Slaven said.
"Stores across the country are not trading and they are in discussion with their landlords for the way forward."
Despite the economic downturn brought on by coronavirus, Mr Slaven said he had not seen any other businesses in the ACT enter into administration.
He said federal government JobKeeper payments to struggling businesses had helped a high number of companies avoid going into administration during the pandemic so far.
"It's been enabling companies to continue, so they can pay staff their wages, and other relief afforded to them in relation to landlords and things like that," Mr Slaven said.
However, with JobKeeper payments set to be reduced, Mr Slaven said the situation could change in the months ahead, which could lead to a large financial impact for many businesses.
Full-time workers will have the rate of fortnightly JobKeeper payments reduced from $1500 to $1200 by the end of September, dropping further again to $1000 on January 3.
Those who were working less than 20 hours a week will have their JobKeeper payments cut from $1500 to $750 a fortnight from the end of September.
"There will have to be [further voluntary administrations] at some point," Mr Slaven said.
"The expectation among consultancy practices across the country is that things will pick up in terms of the number of insolvencies.
"The timing of it all is just the uncertainty."
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