ASIC records 92 Qld administrations and insolvencies in February, up 142 per cent

Construction and hospitality businesses are in the firing line with a surge in company collapses in Queensland over the past month driven by bad economic news. SEE THE LIST

• Building insolvencies ‘canary in the coalmine’

Local and global pressures are putting increasing strain on businesses with Queensland insolvencies surging higher in February as the construction and hospitality sectors bare the brunt of a “perfect storm”.

According to the Australian Securities and Investments Commission there were 92 administrations and liquidations in February, up 48 per cent from 62 in February 2022. The regulator said that was 142 per cent higher than the 38 recorded in January 2023.

Family owned North Lakes-based Pantha Homes was the highest profile Queensland casualty, going into voluntary liquidation after 18 years and the construction of hundreds of homes.

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

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 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 2022-23, external administrator and controller appointments rose by 62 per cent 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.”