All State Construction Solutions headlines November insolvencies

SA business failures continued to rise from their record lows in November, with a major scaffolding company among the businesses to go bust. See the full list.

Business failures in South Australia are slowly rising from their record lows, with construction, retail and hospitality businesses bearing the brunt of surging inflation and interest rates, and the restart of debt recovery actions by the ATO.

The latest figures from ASIC reveal that 16 local companies fell into administration or liquidation last month, up from 14 in October and 11 in September.

Recent collapses include building companies All State Construction Solutions and MJ Cozy Homes, and Kadina-based Fully Baked Bakehouse.

Clifton Hall partner Simon Miller, who was appointed to wind up MJ Cozy Homes months after the company stopped trading, said the construction, retail and hospitality sectors were most at risk heading into an expected spike in insolvency activity next year.

“We’ve certainly had a few more inquiries in the last couple of months, and indeed the last six months compared to 12 months prior, and most of that has been ATO driven,” he said.

“A lot of the inquiries have been in that space (construction, hospitality and retail).

“Certainly with the last few of our appointments it’s probably 50 per cent of our matters would be covered by those sorts of areas and we expect more of the same.

“I suspect there will be a few more inquiries leading into Christmas, potentially some more appointments, but I expect that after the usual downtime in January there will be a bit more insolvency activity about the place by the end of the first quarter next year.”

North Plympton-based All State Construction Solutions, which had provided formwork, scaffold and safety services to projects including upgrades to the Convention Centre, State Library and O-Bahn tunnel, was one of the more notable collapses in November.

It closed its doors with debts of close to $2m – mostly owing to the ATO – after battling soaring steel costs and a downturn in commercial projects.

Revive Financial partner Jarvis Archer said that rather than focusing on current debt, the ATO was looking at opportunities to issue “lockdown” director penalty notices for older debt.

A “lockdown” director penalty notice can be issued where a company didn’t lodge its BAS (Business Activity Statement) or superannuation guarantee statement within certain time frames.

All State Construction Solutions supplied scaffolding for the recent State Library upgrade. Picture: Facebook

“While some directors are receiving lockdown director penalty notices for current debts, we’ve also seen them issued to directors who wound up their companies years ago,” said Mr Archer.

Mr Archer said retailers will be hoping reports of lower consumer spending are proven wrong as the important Christmas trading period continues.

“The post-Christmas numbers will show how consumers are really feeling, and whether 2023 will present an even more challenging trading environment.”

For small businesses struggling with their finances, Mr Miller said many were increasingly choosing to go through a Small Business Restructuring Process as an alternative to the traditional administration process.

Introduced by the federal government last year, the small business restructuring rules allow company directors to remain in control of their company while restructuring debts under the supervision of a restructuring practitioner.

It’s available to companies with debts of less than $1m.

“It’s certainly seen as a good way and a less expensive way with less involvement from the practitioner given the directors continue to trade the business themselves,” he said.