Insolvencies surge close to 10k for FY2023–24
The number of insolvencies has continued to rise and remains well above pre-COVID-19 levels, the latest ASIC data has revealed.
ASIC’s latest insolvency figures indicate there were a total of 9,996 companies that had entered external administration or had a controller appointed at 2 June this year.
The insolvency figures for the 2023–24 financial year so far are already around 25 per cent higher compared with the figure for the entire 2022–23 financial year.
They also remain well above the base level average of the 2017, 2018 and 2019 income years which was 7,939.
CreditorWatch chief economist Anneke Thompson said data from the latest CreditorWatch Business Risk Index pointed to “ever-increasing stress levels in the Australian business sector”.
“A new record high was set for trade payment defaults in May 2024, and this follows record highs set in February and April 2024 also,” Thompson said.
“The ATO are also calling in overdue debts in increasing numbers, and court actions and insolvencies are rising steeply – and now well above pre-COVID levels.”
Thompson said it was clear that cash flow issues were also starting to permeate through the Australian small business sector.
Construction remains the sector with the highest number of insolvencies at 2,711 this year so far, followed by accommodation and food services at 1,498.
The rate of insolvencies in agriculture, forestry and fishing sectors has almost doubled from last year, increasing around 89 per cent.
Other services also saw a rapid rise in insolvencies with the number of insolvencies increasing by around 51 per cent from the 2022–23 year.
This was followed closely by professional, scientific and technical services with a 49 per cent increase in the number of insolvencies.
ASIC had previously warned that insolvencies would likely reach 10,000 by the end of the financial year back in April.
“With only one quarter remaining this financial year, it’s expected that the number of companies entering external administration by 30 June 2024 will exceed 10,000,” the regulator said.
It said the surging levels of company failures had not been seen since the 2012–2013 financial year when 9,254 companies entered external administration.
