ASIC records 484 administrations and insolvencies in February, up 134 per cent since January

Construction, transport and hospitality firms are in the firing line with company collapses surging 130 per cent in the last month driven by bad economic news. Full list of 484 companies

Australian companies are hitting the wall in increasing numbers as a perfect storm of rising costs in the transport, construction and hospitality sectors is combined with a warning from the tax office to “pay up or get wound up”.

There were 484 administrations and liquidations across the country in February, up 45 per cent from the same time a year ago and 134 per cent up from January this year, according to data from the Australian Securities and Investments Commission.

NSW apartment developer EQ Constructions was one of the high-profile collapses in February, with initial reports indicating it owned at least $40m to $50m to up to 500 creditors.

North Lakes-based Pantha Homes was the highest profile Queensland builder to go bust over the past month and in Victoria, awarding winning residential builder Delco Building Group went under.

Last week transport giant Scott’s Refrigerated Logistics, a major supplier to Australia’s biggest supermarkets, plunged into receivership, putting 1500 jobs at risk.

The couple behind the popular Brisbane Octoberfest Festival also recently had to call in liquidators amid increasingly tough conditions in the hospitality sector.

And March is also shaping up as a big month for company failures, with craft brewer Tribe Breweries, which operates one of the country’s largest production breweries, a $35m facility in Goulburn, in NSW, going into voluntary administration.

Revive Financial head of business restructuring & insolvency Jarvis Archer said for any business with tax debt the ATO’s message was very clear – “pay, or get wound up”.

He said wind-up notices were heading towards pre-pandemic levels.

“On top of director penalty notices, the ATO is now issuing statutory demands, the precursor to court winding up applications. A last resort, this tough approach hasn’t been seen for three years,” Mr Archer said.

“The ATO’s escalating approach, together with ongoing staffing and supply chain issues, and economic pressures may create a perfect storm for many business owners who have battled for three years already.”

Octoberfest celebrations in Brisbane are now in doubt after liquidators called in.

Mr Archer said most of the so-called zombie companies have been cleaned up and the focus was on trading businesses, many of whom have been operating for 10 to 15 years which shows the depth of difficulty they are facing.

“The Government’s promise was that 2022 was the year we’d return to normal. But with Government support cut, and economic uncertainty, many are having the toughest year of the pandemic,” he said.

According to the latest Corporate Insolvency Index produced by Insolvency Australia in the first half of the 2022-23 financial year, external administrator and controller appointments rose by 62 per cent to 3638 across the country compared with the previous corresponding period.

The Corporate Insolvency Index shows NSW had the most insolvencies over the six months, recording total appointments of 2153; while Victoria recorded 1192 appointments; Queensland 796; WA 346; SA 133; the ACT 96, and Tasmania and the Northern Territory both had five.

Construction is one of the main sectors impacted the economy.

WCT Advisory managing partner Andrew Weatherley said he expected a steady increase in insolvency appointments in 2023.

“I think that is starting to show in February 2023 and that’s predominantly driven by the impact of increased interest rates, inflation and energy prices and continued staff shortages and increased wages.” he said.

“I saw the recent announcement about the annual wage growth rising by 3.3 per cent in the December 2022 quarter, which was slightly less than the September 2022 quarter was still the largest since 2012.

“That shows the pressures business, especially small businesses, are under in relation to employees. I don’t see those factors decreasing any time soon.

“I still think the industries which will be greatest impacted by insolvencies will be construction, accommodation and food services and retail trade.”