Construction and hospitality sectors hardest hit
There is a concerning rise in the number of failing Australian companies, latest insolvency data from the Australian Securities & Investments Commission (ASIC) has shown.
During the nine-month period from July 2023 to March 2024, a total of 7,742 companies entered external administration, marking a 36.2% increase compared to the same period in the previous year.
The construction sector, with 2,142 companies, and the accommodation and food services industries, with 1,174 failures, were the hardest hit, accounting for approximately 27.7% and 15.2% of the total, respectively.
Furthermore, the ASIC report highlighted notable surges in restructuring and court liquidation appointments. Restructurings jumped by 294.6% to 878, while court liquidations increased by 218.8% to 1,593, both figures surpassing totals recorded in the entire preceding fiscal year.
With the fiscal year ending on June 30, 2024, projections suggest that the total number of companies entering external administration could exceed 10,000.
The figure would be the highest since the 2012-2013 financial year, although the current ratio of company failures to registered companies is projected to be between 0.3% and 0.33%, still below the 0.53% seen in 2012-2013.
ASIC said the period also saw a rise in the total number of registered companies in Australia from just over 2 million to 3.3 million.
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