What Happened
GT Advisory & Consulting, a specialist insolvency firm based on the Gold Coast in Queensland, published a statement on 2 October 2026 identifying AI adoption as a potential compounding risk for Australian small-to-medium enterprises already experiencing financial difficulty.
Glenn O'Kearney, the firm's registered liquidator and Principal, said the concern centres not on AI technology itself but on the speed at which financially pressured businesses are changing their cost base and operating models in response to it. "When margins get squeezed, businesses naturally start looking at their cost base, and AI is increasingly part of that conversation," O'Kearney said.
The firm said corporate insolvencies across Australia remain at elevated levels. Against that backdrop, the rapid adoption of generative AI is creating what GT Advisory describes as a new set of operational and restructuring risks for some SMEs.
Why It Matters
O'Kearney drew a distinction between AI as a cause of insolvency and AI as an accelerant. "AI isn't, by itself, causing businesses to become insolvent. What it can do is accelerate problems that are already there," he said.
The concern, as GT Advisory frames it, is that businesses under financial pressure may restructure their workforce or operations around AI tools without fully accounting for the transition costs, legal obligations, or the time required before any efficiency gains materialise. For a business already running on thin margins or carrying ATO debt, those transition costs can tip the balance.
The firm's statement does not quantify how many businesses have encountered this specific combination of pressures, but it places the observation within the broader context of persistently elevated insolvency numbers nationally.
Key Details
GT Advisory identified four formal pathways available to businesses facing financial distress, depending on their circumstances: an informal restructure, Small Business Restructuring where eligibility requirements are met, voluntary administration, or liquidation where the business is no longer viable.
O'Kearney emphasised the importance of timing. "The earlier directors deal with financial pressure, the more options they generally have. Once the cash is gone, the ability to restructure the business or preserve value becomes much more limited," he said.
On the question of what distressed businesses should do, O'Kearney said: "For businesses under financial pressure, the key is to understand the available options before working capital is exhausted. Depending on the circumstances, that might involve an informal restructure, Small Business Restructuring where the eligibility requirements are met, voluntary administration or, where the business is no longer viable, liquidation."
Background and Context
The statement from GT Advisory comes as Australian businesses continue to face a combination of structural and cyclical pressures. The firm cited weak consumer sentiment, high operating costs, tight margins and ATO debt recovery activity as the primary and ongoing drivers of business distress. Generative AI adoption sits on top of those existing pressures rather than replacing them as a concern.
Small Business Restructuring is a formal process introduced under Australian insolvency law that allows eligible small businesses to restructure their debts while remaining in control of their operations. Voluntary administration is a separate process that places a company's affairs in the hands of an independent administrator while options are assessed.
GT Advisory & Consulting operates as a specialist insolvency and advisory firm out of the Gold Coast, Queensland.
What Comes Next
GT Advisory did not announce any specific forthcoming actions or policy submissions in its statement. O'Kearney's comments suggest the firm expects AI-related operational changes to remain a factor in insolvency cases as generative AI adoption continues among Australian SMEs. The firm's position is that early engagement with restructuring options, before working capital is depleted, gives directors the broadest range of choices.