The Australian Securities and Investments Commission (ASIC) has released data indicating a marked increase in the number of company insolvencies from July 1, 2023, to March 31, 2024.
This period saw 7,742 businesses enter external administration, representing a 36.2% rise from the same period in the previous year.
Significant impacts were observed in the construction and accommodation and food services industries, where 2,142 and 1,174 companies, respectively, faced insolvency. These industries accounted for a substantial portion of total company failures, totalling nearly 43%.
The report also highlighted a notable increase in restructuring and court liquidation appointments. There were 878 restructuring cases, a 294.6% increase, and 1,593 court liquidations, an upsurge of 218.8% compared to the prior period. These figures exceed those recorded for the entire preceding fiscal year, which ended on June 30, 2023.
With the fiscal year ending on June 30, 2024, it is anticipated that over 10,000 companies will have entered external administration, a volume not seen since the 2012-2013 financial year.
The current ratio of businesses entering external administration to the total number of registered companies is projected to be between 0.3% and 0.33%. This rate remains below the 0.53% observed in 2012-2013, despite the growth in total registered companies from slightly over two million to 3.3 million over the same timeframe.
ASIC continues to monitor corporate health through regular releases of insolvency statistics. It also tracks the number of practicing registered liquidators, which, as of March 31, 2024, stood at 646, slightly down from the previous year.
Last month, ASIC chair Joe Longo offered his insights on the challenges directors face in today’s fast-paced business world.
