👉 Background: Star Entertainment is one of the biggest casino operators in Australia, with casinos in Sydney, Gold Coast, and Brisbane. But over the past few years, Star Entertainment has been involved in various illegal activities.

👉 What happened: Now, Star Entertainment has gone into a trading halt for failing to provide its accounts to the ASX on time. Star warned that it is currently reviewing its financial and liquidity position. It likely needs to restructure the company ASAP and find $300 million in cash to avoid collapse.

👉 What else: Star is essentially begging the NSW and Queensland governments to spot them some cash before they’re completely tapped out. It's not just a bad hand, Star is facing a major liquidity crisis.

What's the key learning?

💡A liquidity crisis happens when a company can’t meet its short-term financial obligations - with the cash it has on hand at that time.

💡This often leads to panic, as lenders and investors lose confidence in the company’s ability to pay its bills. In Star’s case, it's facing a $300 million cash crunch, which may force it to sell off assets at a loss or take on expensive emergency financing just to stay afloat.

💡It already wants to write down the value of its assets by $1.4 billion. So if it doesn’t find a way to access more cash or can't convince the government to push back its tax payments, it could be in real trouble.