Queensland company insolvencies in July soared by 23 per cent compared to 12 months ago

Rising interest rates, inflation and labour shortages have conspired to ensure insolvencies in Queensland were up 34 per cent in July compared to 12 months ago. SEE THE LIST

The number of Queensland company insolvencies in July soared by 23 per cent compared to 12 months ago as inflation and interest rate rises kick in.

According to indicative data from the Australian Securities and Investments Commission there were 87 liquidation or administration appointments in Queensland in July. That was a 23 per cent increase compared to 69 in July 2022.

However, with data varying wildly month to month liquidation and administration appointments were almost 34 per cent down on the 131 insolvencies in June this year.

However, the number of company failures in the Queensland construction sector have steadied.

Revive Financial head of Business Restructuring & Insolvency Jarvis Archer said while big builders continue making headlines they currently appear to be predominantly from Victoria and NSW, not Queensland which has been the epicentre for what was wrong with the industry for the past couple of years.

“Looking at the numbers, Queensland construction failures have steadied for now, below 25 per cent of local insolvencies, whereas the southern states are seeing construction insolvencies around 30 per cent of their state totals,” he said.

Mr Archer said as supplier prices stabilise, it seems there’s a two-speed dynamic emerging in the building industry.

“Project builders and those in the low margin space competing on cost, still find it challenging, whereas higher end builders are seeing growth and strong margins.

“This makes sense given the sensitivity to economic conditions of cost-conscious buyers, who are often first homeowners stretching their borrowing capacity to build.

“Whereas cashed-up buyers and renovators, less concerned about interest rate rises, are still pushing forward with residential projects.

While economic conditions remain uncertain, customers are more hesitant going ahead with projects. The slowing demand in construction will likely cause more insolvencies before confidence is restored.”

Gold Coast based GCB Constructions went into administration.

On the Gold Coast the embattled GCB Constructions finally went into administration, leaving construction of more than 500 apartments in limbo.

In other failures, Intensive Events was behind one of Australia’s largest electronic dance music events – the Lunar Electric Music Festival – went into administration.

WCT Advisory managing partner Andrew Weatherley said the accommodation and food services industry in the firing line.

“They are starting to suffer from a decrease in consumer spending levels and overall confidence and where, particularly in small business, a lack of capital or funding options can limit options,” he said.

“I think the biggest change that will continue to lead to increase insolvency numbers is that banks are tightening lending criteria making refinance and finance options more difficult to obtain, creditors are increasingly taking action to recover debts and the ATO is much more aggressive in pursuing outstanding amounts, in particular with DPNs (Director Penalty Notice) to directors.”