Record Insolvencies Surge Among Australian Companies

1

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The surge, driven by a 40% increase in corporate insolvencies, has been attributed to a combination of persistent inflation, rising interest rates, and the Australian Taxation Office's (ATO) aggressive debt collection tactics.

"We're seeing a perfect storm of economic conditions that are driving businesses to the brink," remarked Michael Sloan, restructuring and insolvency partner at Ashurst. "The usual suspects of inflation, interest rates, and overall economic sentiment are key factors."

Small to medium enterprises (SMEs) are particularly vulnerable, facing a more stringent ATO, which is increasingly unwilling to continue supporting struggling businesses. Additionally, sectors like property development and health care are grappling with their own financial challenges.

Restructuring specialists are predicting a continued rise in insolvencies. "The current trend is likely to endure over the next 12 months," commented Kathy Sozou, a partner at McGrathNicol and vice-president of the Australian Restructuring Insolvency and Turnaround Association.

Jennifer Ball, partner at Clayton Utz, echoed these sentiments: "Unless we see a stabilization in inflation and a drop in interest rates, we're set for a busy year in insolvencies. A significant number of smaller businesses could fail through to the end of 2024 and into 2025."

In addition, ASIC's separate data indicates a striking rise in the appointment of restructuring experts. Over the same financial year, 1,424 companies enlisted these specialists, marking a 219% increase from the previous year. The trend has continued into the first weeks of FY 2024-25, with 36 companies already seeking their services, compared to just 36 in the corresponding period of the previous year.

Gareth Gammon, director of Insolvency Australia, described the figures as "astonishing yet expected," considering the current cost-of-living pressures, elevated interest rates, and the ATO's firm stance on debt collection. "The ATO is in overdrive to recover debts, especially from small businesses. Directors are dealing with ongoing economic challenges and a tough macroeconomic environment," Gammon stated.

Gammon also noted, "This situation is leading to a rise in court-initiated windings-up. Conversely, it is pushing more directors to take proactive actions to salvage their businesses."

From an economic viewpoint, these developments provide another indicator of Australia’s per capita recession. Although the overall economy might seem to be growing, boosted by immigration, individual households and businesses are struggling to keep pace.

As we look ahead, the need for strategic financial planning and responsive policy measures becomes clear, not just to help businesses survive, but to facilitate broader economic stability.

Published:Sunday, 11th Aug 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

Ian Thorpe Embarks on New Challenge in Sydney-Hobart Yacht Race

10 Dec 2025: Paige Estritori

Australian Olympic swimming legend Ian Thorpe is set to make waves in a new arena by joining the crew of the supermaxi yacht LawConnect for the upcoming Sydney-Hobart Yacht Race. This marks a significant transition for Thorpe, who has previously dominated the swimming world with five Olympic gold medals. - read more

BIA's 'Discover Boating' Initiative Encourages Australians to Embrace the Water

10 Dec 2025: Paige Estritori

The Boating Industry Association Ltd (BIA) has unveiled its annual 'See You Out There' campaign, a key component of the 'Discover Boating' initiative aimed at inviting Australians to experience the joys and benefits of boating. Launching on November 1, this campaign seeks to highlight the freedom, connection, and well-being that come from spending time on the water. - read more

Sydney International On-Water Boat Show 2025: A Resounding Success

10 Dec 2025: Paige Estritori

The 56th Sydney International On-Water Boat Show has successfully concluded after four dynamic days at Darling Harbour, reaffirming its status as a premier event in Australia's marine industry. Presented by the Boating Industry Association Ltd (BIA) in partnership with Mulpha Events, the show attracted over 20,000 visitors, offering a comprehensive showcase of the boating lifestyle. - read more

Celebrating the Success of the 2025 Sydney International On-Water Boat Show

02 Dec 2025: Paige Estritori

The 56th Sydney International On-Water Boat Show, held from 13 to 16 November 2025 at Darling Harbour, has concluded with remarkable success. This year's event attracted over 20,000 visitors, underscoring the enduring appeal of Australia's marine lifestyle and industry. - read more

Victoria's Arcadia Hatchery: A Milestone in Native Fish Production

02 Dec 2025: Paige Estritori

Victoria has taken a significant step forward in native fish conservation with the opening of the Arcadia Native Fish Hatchery, now the largest facility of its kind in Australia. Located just south of Shepparton, this state-of-the-art hatchery is set to revolutionise the state's fisheries sector and bolster recreational fishing opportunities. - read more

Unveiling the Cause of South Australia's Harmful Algal Bloom

02 Dec 2025: Paige Estritori

Since March 2025, South Australia's coastline has been grappling with a harmful algal bloom (HAB) that has severely impacted marine life, the fishing industry, and tourism. Recent research has identified Karenia cristata as the dominant species responsible for this environmental crisis. - read more

Click for more Finance News