The Victorian businesses that couldn’t survive cost of living crunch in 2024
Soaring utility costs, interest rates and a ramping up of debt collection by the tax office drove a sharp spike in the number of businesses going bust in 2024. Here are some of the biggest names to collapse.
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Rising interest rates, hefty hikes in power bills, a heavy tax burden and a lack of spending among consumers weathering a cost of living crisis has driven an alarming spike in the number of businesses going bust in Victoria.
A ramping up of debt collection by the tax office, which brought out the “big guns” to chase small business debt, has also put companies in a pressure cooker, insolvency experts say.
The number of Victoria businesses that collapsed into insolvency soared by 33 per cent, from 2,144 in 2022-23, to 2,863 in 2023-24, annual data from ASIC shows.
Construction made up nearly a third (27 per cent) of total national external administrations in the most recent financial year, while accommodation and food services accounted for 15 per cent.
AS Advisory director Andrew Schwarz said the increase in insolvencies this year mostly hit small businesses.
“With the predominant driver being increased tax debt which in many cases has been a hang over from Covid,” he said.
“With a downturn in economic activity and increases in input costs, many businesses have not been able to get on top of their tax debt that has accrued over the last few years.”
Jirsch Sutherland partner Malcolm Howell said the tax office had issued thousands of penalty notices to directors, “dangling the threat of the debt appearing on directors’ credit records”.
“With the ATO and State Revenue Office ramping up collections and with the cost of doing business in Victoria continuing to increase, many business owners have been forced to make the hard decision: whether it’s worth trying to push on or throw in the towel,” he said.
The Business Council of Australia ranked Victoria the worst state in which to do business in the nation due to the amount of red tape and taxes, specifically the state’s payroll and land taxes.
Mr Howell said he expected a “significant uptick” of businesses going insolvent at the end of this financial year.
“The number of insolvencies will continue to rise well into 2025 due mainly to quadruple economic pressures: high interest rates, high cost-of-living/utility costs, taxes on businesses and properties, and the resultant decrease in discretionary spending,” he said.
“Not only that, but businesses are faced with higher wages and a significant drop in available staff.”
He said he had heard from a number of accountants that there was a significant number of businesses that weren’t lodging tax or superannuation statements simply because they didn’t have the money.
“It appears there are many that are flying under the radar that the ATO does not know about. It could well open the flood gates,” he said.
“It’s important that businesses and individuals that are in financial distress don’t put their heads in the sand, but rather seek guidance as soon as possible.”
Here are some of the companies you may recognise that collapsed this year.
Varaich Homes
Melbourne-based builder Varaich Homes was placed into administration in September, leaving an estimated 21 incomplete homes across the state.
Devastated clients claimed the company targeted “vulnerable” individuals, failed to obtain adequate insurance and forced customers to pay large deposits ahead of construction.
Varaich Homes, which also traded under the names Harcon Property Group and Varaich Constructions, was established in 2016 and specialised in custom luxury homes, knockdown rebuilds and multi unit developments.
Tango Caravans
Melbourne caravan maker Tango Caravans collapsed owing more than $3.3m in August this year.
Last month liquidators told customers, some who are facing losses of up to $100,000 each, that they will never get their money back.
Tango is being investigated by Victoria’s consumer watchdog, with liquidators finding director Sarah Horter possibly traded while insolvent for more than a year and potentially oversaw unfair preference payments.
Billson’s Beverages
Billson’s Beverages, which was put into voluntary administration by husband-and-wife owners Felicity and Nathan Cowan in July this year, entered insolvency with debts of up to $21.3m.
This includes more than $1m owed to employees, $5.5m to 141 unsecured creditors, and $12.3m to banking giant National Australia Bank.
Billson’s, which operates from a historic brewery in Beechworth in eastern Victoria, is best known for their ready-to-drink vodka, craft beer and cordial, commonly sold at Dan Murphy’s, BWS and Coles.
The company was thrown a lifeline in December and avoided liquidation following a creditors’ vote.
The settlement was made by current owners which will see them continue to trade the business under a new corporate structure.
Grandeur Homes
More than 100 homes across Victoria were left unfinished when Grandeur Homes collapsed in August, owing up to $7.3m, including $139,000 to employees and more than $6m to unsecured creditors.
Among suppliers facing significant losses is prefabricated timber trusses maker Melbourne Truss which is owed nearly $500,000.
Creditors have now voted to liquidate the builder, which had customers across Melbourne’s outer north, east and west as well as in Geelong and Bendigo.
A family caught up in the company’s collapse previously told the Herald Sun they were trapped in a “living nightmare”, having to spend hundreds of thousands of dollars to fix dodgy works and finish their dream home.
Highline Caravans
Failed Melbourne caravan maker Highline Caravans went into liquidation in May, owing $1.3m including $1.2m to 64 unsecured creditors.
The Australian Taxation Office was the largest creditor owed $236,106.
Other major creditors RV supply stores including Caravan and Camping Aus owed $110,931, NCE owed $86,644, and Plenty River Plumbing owed $72,018.
The Herald Sun previously revealed Highline’s liquidator had begun probing hundreds of thousands of dollars in loans and wages given to the director and a family member before its collapse.
Based in Campbellfield, Highline designed and made custom caravans, spanning 13 different models, including an all electric van.
Actura Australia
Space camp tour company for school students, Actura Australia, collapsed in June, owing hundreds of creditors more than $18m.
The company owed $935,000 to secured creditor Synnex Australia and $730,000 to staff and priority creditors.
It also owed $17m to unsecured creditors, with a list of the students whose families had paid to go on the camps provided owed between $2000 and $14,000.
Victorian students affected attended Korowa Anglican Girls’ School, Firbank Grammar School and Mentone Girls’ Secondary College.
VCON
Luxury Melbourne construction company, VCON, hit financial turmoil, sacking staff and putting a key corporate vehicle into liquidation.
VCON Group and VCON (Aust) were put into liquidation in December, according to ASIC.
The companies appear to be the key businesses holding the assets of luxury builder VCON which operates across Melbourne’s southeast and on the Mornington Peninsula.
The Herald Sun has been told around 40 staff were laid off in a company meeting, when the liquidation was announced to employees.
VCON had various luxurious, award-winning developments, including apartment building Fawkner House in South Yarra.
The company also worked on the $40m development of Jackalope Hotel in Merricks North which included a 143-year-old homestead and winery with a 46-room hotel.
Designer Projects
Melbourne-based home building company, Designer Projects, went bust in June, 18 months after it was forced to pay more than $40,000 in fines for underpaying an employee.
Liquidators said the company had a debt with the Australian Taxation Office of between $250,000 to $300,000.
The Federal Circuit and Family Court previously fined the Melton company $39,960 for failing to calculate and back-pay entitlements and provide pay slips to a worker in November 2022. Director Visna Thanthrige was also fined $3,996 – totalling $43,956 in penalties.
Mosaic Brands
Australian clothing giant Mosaic Brands collapsed this year owing almost $250m.
The company went into voluntary administration in October, bringing with it a long list of creditors.
Mosaic owed 23 Bangladeshi garment factories more than $30m. More than 300 employees are also owed an undisclosed amount.
Before going into administration, Mosaic announced it would shut down its entities Autograph, BeMe, Crossroads, Rockmans and W.Lane.
Those closures were supposed to open the way for more investment in its other brands Katies, Millers, Noni B and Rivers, but ultimately the restructure was unsuccessful.
Montego Homes
Montego Homes went into voluntary administration in January, plunging the fate of 100 homeowners into jeopardy.
Appointed administrators previously said the company owed $2.5m to unsecured creditors.
Eleven staff also lost their jobs as a result of the collapse.
Harrolds
After nearly 40 years of operation Australian luxury fashion retailer Harrolds was quietly put into liquidation in October.
The designer retailer collapsed owing nearly 90 creditors more than $16m.
This included Victoria Beckham’s company owed $30,000, two of Tom Ford’s companies owed $33,000 and American designer Thom Browne owed $253,000.
The company was founded in 1985 with its first store opened in Melbourne and was the Australian home of fashion brands from the likes of Tom Ford to Saint Laurent and Balmain to Burberry.
Carl’s Jnr
Popular US burger chain Carl’s Jr placed its Australian stores into voluntary administration in July.
Hundreds of jobs were expected to be affected from the slashing of the entire Australian franchise – made up of 24 stores mostly located in regional areas in NSW, Queensland and Victoria.
The CJ’s Group independently owns and operates 24 restaurants, while it is a master licensee to the remaining 25 locations, which are owned and operated by third-party sub-licensees.
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