A week after the menard boom was triggered by a sharp rise in commodity prices, the state government has warned that the crisis is far from over and that businesses will struggle to repay loans for some time to come.
In a briefing to the Australian Financial Council on Tuesday, Minister for Business, Innovation and Employment Matthew Guy said that while he expected businesses to continue to make loans to the banks, there was no guarantee they would be repaid in full.
“What we are seeing in the market is a significant level of credit default risk and there is a need to manage this,” he said.
“This is not the time to be complacent.”
The Australian Capital Territory is struggling to pay back loans owed by menards workers after the company collapsed in 2016.
The state’s largest employers have said that they have had to take on huge amounts of debt to survive and the government has announced a series of measures to help them pay.
More than $12 billion was lent by the state to the menarts lenders, which were bailed out by the Federal Government.
The federal government has promised to lend up to $2.4 billion to menards, but the state has not had any help from the federal government.
“I’m very worried,” Mr Guy said.
In response to questions from the ABC, the Australian Capital Territories Department of Finance said it was too early to tell how much it was going to need from the government.
It would be premature to say at this stage, because the lenders have not been repaid and they will need some time, to make a repayment, and we’re not yet certain that they’ll be able to pay it back, Mr Guy told the ABC.
The State Government said it would seek to meet the needs of menards lenders over the coming months.
“The State Government will work with the lenders to help resolve their obligations,” a spokesman for the Department of Business, Culture, Tourism and the Arts said.
He said the State Government had “no plans to impose additional capital requirements” but would continue to provide assistance to the lenders.
What is menards?
Menards is a large furniture and kitchenware retailer based in Sydney.
It has more than 700 employees and employs more than 20,000 people across Australia.
Its menards website says it is the largest furniture retailer in Australia, with more than 200 outlets in regional and remote areas.
Mr Guy said the company had experienced “a massive decline” in its business and the loss of more than $20 billion of assets.
He said the government would be “firmly committed” to providing the State of the Territory with the financial support needed to continue operating.
How is the menands crisis affecting menards businesses?
The menards boom was fuelled by a boom in commodity oil prices in the late 2000s, which helped the company recover.
But as oil prices dropped, the company’s sales fell and it eventually filed for bankruptcy.
In 2017, menards announced that it had been forced to sell more than 5,000 of its retail stores, which meant the company was facing financial difficulties.
The menards crisis has had a significant impact on businesses in the region.
A group of local menards suppliers is challenging the government’s decision to allow a new menards supermarket in their community, claiming it will cause “significant disruption” to local businesses.
They are also challenging the federal Government’s decision not to extend a $300 million loan guarantee for the menords, saying it will cost the company $6 billion to repay.