A Google search of "business debt hibernation NZ" will return more than 50 articles from different professional services firms advising how to use it.
In one of these, law firm DLA Piper writes, "while we remain interested to see how the practical use of the BDH regime plays out in the current economic environment, we suspect it may not get the traction its drafters intended and ultimately become much ado about nothing".
The law firm may very well be right as the number of firms writing about BDH is twice the number that have applied to use it so far.
There are more than 480,000 small businesses in New Zealand, but to date 25 firms have applied to use the scheme, one of the government's temporary support measures to get through Covid-19.
The scheme, which has been available since May 19, allows firms that meet certain conditions to freeze the debt they owe to creditors and pay it back later.
Cabinet papers advising the government to put the scheme into play did not provide estimates of what take-up would be like, but simply urged a range of measures to help businesses with cashflow issues.
Who is using it
There are two stages to the scheme: first notify officials you want to use it, which 25 firms have, and then successfully getting enough creditors to agree to the six-month debt holiday.
At July 13, five businesses had been successful in getting an agreement.
The five include restaurants Salt & Pepper Catering and Campbellfield & Co, Wellington's Harbour City Painting and Waterproofing and two companies owned by entrepreneur Debra Chantry - Ventell and The Common NZ.
Chantry said Ventell, a business coaching service, and The Common, a business club and event space, suffered because of Covid-19. Ventell experienced an 80 per cent drop in income at the start of lockdown.
Having already sold her house to fund The Common, Chantry said she had no other way to fund the business, so decided to freeze the debts owed.
She said the scheme was easy to use by following the process online.
"We agreed with our creditors that we intend to start paying them as soon as is possible and be back to fully normal by March 2021."
Restaurant owner Julia Gerritsen of Salt & Pepper Catering said her company owed $30,000, and she filled in the paperwork herself, so that she wouldn't have to pay for a lawyer.
Gerritsen said that most of her creditors - utilities and suppliers - had been supportive anyway, so long as arrangements were made to pay them back in small amounts.
However, she was sceptical about whether the scheme would really work, as she anticipated her landlord would try and find a loophole.
McGrathNicol partner Kare Johnstone said it was too early to tell if the scheme was working, but noted that creditors and especially banks were generally being supportive and that many were negotiating lines of credit.
"The key thing is that it effectively provides breathing space and a moratorium to continue trading while they assess their trading and have discussions with key stakeholders," she said.
Johnstone reckoned the full brunt of Covid-19 wouldn't be evident until October or November, once both stages of wage subsidy had worn off.
"There will come a point in time when businesses need to really address the challenges they are facing and whether they can come out the other end of this," she said.
PwC insolvency figures show businesses are still hanging on. Last month 140 firms were put into liquidation. The figure in July last year was 162.
Threat is enough
In any event, a low uptake of the scheme does not mean it is a failure, if you follow the theory of retired judge Paul Heath QC.
At the legislation's passing he said that even if the scheme was not used, the mere fact it is an option for struggling businesses gives them power, as the fact they could force the debt holiday would make creditors more accommodating.
"The object of the exercise is to get the best possible result for your company and that is more likely to be through collaboration," he said.
The scheme is available until December 24 but this could be extended through regulations.
Across the ditch, KPMG has proposed the Australian Government adopt a similar scheme, according to AFR reports.