QLD insolvencies hit 665 as building sector suffers wave of failures in 2021-22

The number of Queensland companies going bust hit 665 over the past 12 months with high-profile builders among the biggest casualties. See the full list.

Workers leave the Probuild worksite on 443 Queen Street. Picture: Zak Simmonds

Almost 700 Queensland companies failed last financial year marked by a string of high-profile construction company collapses, with experts tipping a new wave of insolvencies ahead as interest rates and inflation hit home.

In the last 12 months the construction industry suffered a perfect storm of conditions, including supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics and extreme weather events.

Privium, BA Murphy, Condev and Pivotal Homes were just a few household names that collapsed in the 12 months in a year which saw 665 liquidations or administration appointments, albeit down from 731 failures in 2020-21.

In June there 76 insolvencies, compared to 73 in the same month last year.

WCT Advisory managing partner Andrew Weatherley believes inflation and interest rate rises will trigger more insolvencies in 2022-23.

However, he said it will take several rate rises before it really impacts businesses and that probably won’t happen until the middle of next year.

“I’m advised that banks and smaller financiers have started to issue their notices of default and in particular from private lenders moving certain borrowers to default interest rates,” Mr Weatherley said.

“This will increase the pressure on borrowers and start to eat into equity of any property/assets held but I still think it will take several months before that has a significant impact on insolvency numbers.”

Sub-contractors and tradesmen pack up their equipment and walk off Probuild’s construction site at 443 Queen St when the company went into administration earlier this year.

Mr Weatherley said businesses will increasingly suffer from a more proactive ATO and banks, increasing prices, increasing interest rates, falling consumer confidence and lower asset values.

“The bottom line is that I think pain is coming but it will still take several months before those factors have a significant impact on insolvency numbers,” he said.

Mr Weatherley said he expected the ATO to stake a stronger stance in 2022-23 to collect about $32bn in tax debt.

According to the Australian Bureau of Statistics in March, 22 per cent of businesses said it was difficult or very difficult to meet their financial commitments in the next three months.

“I understand that the ATO will issue further warning letters later this calendar year and start taking a more aggressive approach,” he said.

“I know myself of several leads where we have recommended liquidation because the business is not viable but the director is hanging on waiting for a trigger.”

Equifax head of product and rating services Brad Walters said there has been a substantial increase in creditor wind-ups, voluntary administrations and restructuring appointments.

Creditor wind-ups have triggered the majority of insolvencies, and the construction sector has grown to represent 28 per cent of all Australia-wide insolvencies.

“Small-scale operators in Australia’s construction industry could well be the canary in the coal mine for the difficulties that lie ahead for this sector,” he said.

“Rising rates of construction industry insolvencies and cost of living pressures continue to place a heavy financial burden on sole traders and small business owners.”