More firms collapse amid flood, supply chain problems

Company insolvencies are on the rise in Queensland, with floods, supply chain issues and an ATO crackdown taking their toll. Check out all the companies that went bust in March.

The number of company collapses is expected to increase in coming months.

Floods, supply chain issues and a crackdown on tax debt could force more Queensland companies to the wall over the next few months.

ASIC records show liquidators or voluntary administrators were appointed to 71 Queensland-based companies in March, up 31 per cent from 54 in February and 28 in January

Troubled traffic control firm Evolution Group has put another one of its subsidiaries, Evolution Traffic Management, into administration after the parent company racked up losses of almost $26m over the last two years while high-profile Gold Coast building company Condev collapsed owing more than $30m.

Revive Financial head of business restructuring and insolvency Jarvis Archer said that while insolvency appointments were still tracking at 45 per cent to 50 per cent below pre-Covid levels there had been an increase in inquiries for assistance with financial difficulties.

“This is the general consensus amongst other insolvency practitioners,” said Mr Archer. “Perhaps, what’s changed is that there is more urgency for assistance than there has been over the past two years.”

Revive Financial Partner Jarvis Archer

He said construction insolvencies had continued to dominate headlines with Condev, Privium and Probuild owing perhaps upwards of $150 or $200 million to creditors. “It’s hard to see how there won’t be substantial knock-on insolvencies from these events,” he said.

Glazing company Hitec that worked on Probuild’s troubled 443 Queen St project went under in early March owing $3.25m and putting more than 130 people out of work.

Hospitality, construction and transport businesses have dominated the recent inquiries and insolvency appointments.

“Often these companies have wound down their business and appoint a liquidator to finalise their company’s affairs and avoid becoming personally liable for the company’s ATO tax debts,” Mr Archer said.

The Australian Taxation Office (ATO) had in the past week issued warning letters to business owners with outstanding tax debts.

“The warning letters encourage business owners to pay their debts or engage with the ATO to enter a payment plan to avoid further enforcement action,” he said.

WCT Advisory Group partner Andrew Weatherley said construction, retail and hospitality businesses remained the most at risk of collapsing.

Condev collapse will have a continuing impact

“The impact of slow supply and difficulties with staffing are taking a toll on small and large businesses, and the impact on floods will only exacerbate those challenges,” he said.

“I expect to see another one or two large construction company collapses in the coming few months, and still think the impact of those large collapses – Probuild, Condev, BA Murphy and Privium – on local subcontractors have yet to be felt.”

Mr Weatherley said Queensland insolvencies were slightly up in the first three months of 2022 compared to the same period in 2021.

However, he said it will be a while before the impact of the floods will show up in the insolvency numbers.

“It takes time for companies and people to initially clean up, file insurance claims, try and recover and then deal with the financial fallout,” he said.