Queensland insolvencies jump 47 per cent from same time last year amid economic slowdown

Construction and hospitality groups have driven a big jump in the number of companies hitting the wall in July. See the list of names.

Insolvencies in Queensland have climbed 47 per cent compared to the same time last year in a rocky start for the new financial year amid headwinds from inflation, interest rates and a pullback in consumer spending.

According to the Australian Securities and Investments Commission there were 145 administrations and liquidations in July in Queensland compared to 100 for the same last year and versus 95 in 2021.

It comes as ASIC data shows that 820 companies were insolvent in the past month across Australia, up from 715 in July 2022 and from 425 in 2021. The result was worst start to a financial year since 2019.

Construction made up the largest chunk of the pie with 35 companies in that space going under, followed by 25 accommodation and food businesses and 14 retailers.

On the Gold Coast the embattled GCB Constructions 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.

Bulimba’s La Quinta Mexican and popular dessert chain Cowch closed the doors on four outlets at Broadbeach, South Bank, Chermside and Mt Gravatt after struggling since lockdown decimated turnover.

Australian Restructuring Insolvency and Turnaround Association (ARITA) chief executive John Winter said many businesses were yet to feel the full impact of 400 basis points worth of interest rate hikes by the RBA in the past year. He added that despite a pick up in insolvencies, levels were now around those seen before the pandemic.

GCB Construction went into administration last month, leaving more than 500 apartments in limbo. Picture: Glenn Hampson

“Zombie businesses have been allowed to run riot for three to four years now and the clear out of those inefficient businesses is a good thing.” Right now we are moving to more healthier levels.

“We know that there is a 12-18 month lag before businesses really start to feel the pinch and while more businesses will go under but there won’t be a tsunami of collapses.”

Mr Winter said that more construction firms were in trouble and more were likely to go out of business in the months ahead.

Popular dessert chain Cowch went into administration in late July. Picture: Josh Woning

“Construction has been very competitive for the past few years and those fixed price contracts have not been viable as a result of inflation and supply chain woes, which have seen many bleed large amounts of money,” he said.

“Customers getting a house built and creditors such as sub contractors in that space need to be cautious with who they deal with and how much of a bill they can rack up on your behalf.”