Insolvencies on the Rise

Recent reports issued by the Australian Securities and Investments Commission (ASIC) and Australian Financial Security Authority’s (AFSA) have provided some important insights into both Corporate and Personal Insolvencies.

In the ASIC annual corporate insolvency report released in December 2023, ASIC identifies the latest statistics in respect insolvencies in Australia. The report shows that:

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• 1 July 2022 to 30 June 2023, small to medium size corporate insolvencies were the most common companies to enter into financial difficulties;

• The highest number of reports were received for insolvencies in the construction industry (28%), followed by the accommodation and food services industry (15%);

• The most common reported causes were inadequate cash flow or high cash use (52% of reports), followed by ‘other’ (50% of reports) and trading losses (49% of reports);

• Most reports were received for insolvencies in New South Wales (41%), followed by Victoria (27%) and Queensland (18%).

AFSA also released a report which confirms that personal insolvencies are expected to rise by 23% in 2023-24. The report shows that:

• Most people who entered personal insolvency during 2022–23 worked in construction (12.1%), healthcare and social assistance (11%), retail trade (9.5%), other services (9.8%), or transport, postal and warehousing (8.7%);

• Annual personal insolvency volumes are expected to rise to around 12,250 in 2023-24, compared with just under 10,000 insolvencies recorded in 2022-23;

•Economic challenges and cost of living pressures are causing households and individuals to experience greater levels of financial stress.

These reports confirm that insolvency related issues have risen in the past 12 months and are likely to continue to rise in 2024.

If you have received or would like to issue a demand for payment of an unpaid invoice, contact FD Legal on 1300 433 533 as we are here to help with your debt and insolvency disputes.