Queensland company collapses on the rise for November with 58 firms on list including Privium

The number of Queensland company collapses jumped over 20 per cent in the past month, with a growing number of construction-related firms among the casualties. SEE THE LIST

Construction insolvencies feature as a total of 58 Queensland companies entered liquidation or administration in November. Picture: Ian Waldie/Getty Images

The collapse of building giant Privium is unlikely to be the last major failure in the struggling construction sector.

Revive Financial head of business restructuring and insolvency Jarvis Archer says construction companies have been over-represented in insolvency numbers in the past year.

“There is speculation that a number of other major construction companies are in financial difficulty,” said Mr Archer.

A total of 58 Queensland companies entered liquidation or administration in November compared to 47 in October, a 23 per cent increase. They included Privium Group, which has debts of about $80m and crayfish firm Fusion Farming, which is being wound up owing more than $1.15m to creditors.

Mr Archer says that overall insolvency appointments to mid-November are significantly up on 2020 but are still 45 per cent below pre-Covid numbers.

Construction represented 28 per cent of insolvencies up to mid-November similar to 2020. However construction insolvencies from July 2021 to November 2021 were 22 per cent of total insolvencies, up from 17 per cent for the same period last year.

Mr Archer said the Australian Taxation Office appears to be ramping up its debt recovery efforts.”They’ve also rolled back a blanket hold on interest charges, recommencing charging interest on debts from early December,” he said.

Rob Harder put is Privium Group of companies into voluntary administration in November. Picture: Nigel Hallett

Historically from early December, banks and the ATO place a moratorium on recovery action, only recommencing in January. “The light touch approach from the ATO is expected to cease in the new year, and recovery action will return to normal,” he said. “Before this window of opportunity closes, business owners with ATO debts should properly resolve their company’s affairs.”

Mr Archer said that in his recent experience, the ATO had been supportive of proactive efforts by companies to tackle their liabilities, reducing their debt by 75 per cent in one matter, and waiving their debt in full where super was paid out in another.

SV Partners director Alan Scott said there had been an increase in insolvency inquiries from businesses and creditors.

“We’ve noticed an upswing in the last three weeks I suppose - just in the level of inquiry and I know some of the other firms have noticed an upswing in the level of inquiry as well,” he said.

“In the building industry the lack of materials is one thing, a lack of tradies is another, but there’s a whole series of things that are probably an endemic issue in the industry at the moment.”

Mackay Goodwin chief executive Domenic Calabretta said it was time for the ATO to return to its pre-Covid debt collection activities and bring to an end the so-called “zombie companies”.

“At present, there’s an uneven playing field where we see tax compliant businesses unable to compete with other players in their industry, which have not paid their taxes due to the ATO’s complacency to date,” he said.

“If the ATO were to sit on the sidelines, businesses would continue to accumulate unmanageable tax debt, including interest on the debt. It would also wrongly signal that it’s acceptable to be complacent to tax debt.

Worrells partner Con Kokkinos said fears that an escalation of ATO debt recovery activities would result in a “tsunami” of insolvencies were overblown.

“A lot of companies have reassessed their operations and adjusted to accommodate Covid – they’ve revisited their business operations, they’re leaner and a lot of them are in a better position moving forward,” he said.

“Those that were always going to fail will fail, but we don’t envisage a tsunami.

“However the building sector is one area of concern – if there are more collapses in that area it could have a flow on effect.”