More than 100 Victorian businesses going bust every month in latest lockdown

Insolvencies in Victoria have hit the same levels as during last year’s mammoth 112-day lockdown – and there are warnings of more pain to come.

More than 100 businesses a month are going bust under Victoria’s latest lockdown while court actions to recoup owed debts have close to tripled in an ugly sign of emerging stress.

Insolvencies in Victoria have averaged 112 a month since the start of July, numbers from commercial credit reporting firm CreditorWatch show.

Victorian businesses have largely operated under some form of restriction since lockdown 5 was announced in mid-July before bleeding into the ongoing lockdown 6 in early August.

High-profile businesses to be culled amid current restrictions include Melbourne bag maker Crumpler, stationery chain Kikki. K and tourism attraction Melbourne Star.

The Melbourne Star Observation Wheel has collapsed into insolvency. Picture: Alex Coppel

Business collapses during this lockdown are running at the same levels as they were during Victoria’s mammoth 112-day shutdown, which ran from early July to late October last year, a CreditorWatch analysis of ABN deregistrations shows.

But in a key difference the number of court actions lodged by a creditor against businesses in Victoria has surged to average about 330 a month between the July to August period.

That compares to a monthly average of about 115 court actions during Melbourne’s 112-day lockdown.

CreditorWatch chief economist Harley Dale said court cases had been suppressed last year and were likely to continue to rise even as the state came out of lockdown.

“It’s a sign of businesses are becoming increasingly under stress,” he said.

Separate data from the Australian Banking Association shows close to 5000 Victorians sought hardship assistance from banks from July 8 to Aug 1, a period which takes in lockdown 5.

CreditorWatch chief economist Harley Dale says court cases will continue to rise even as Victoria emerges from lockdown.

This includes 2580 home loan deferrals and 76 business loan deferrals.

National Australia Bank has experienced a 20 per cent jump in calls from Victorian small business owners since lockdowns came back into force.

Small business banking executive Ana Marinkovic said business owners needed clarity around what the path out of lockdown would look like in order to prepare their own reopening plans.

She gave the example of a beautician juggling what to do with $60,000 worth of product that is due to expire within the next two months.

“We speak to 25,000 small businesses each week and the resounding message coming through right now is people want hope and certainty,” she said.

“The need for certainty is super important for the small business sector which employs two out of three working Australians.”