ASIC’s annual insolvency data indicates a surge in company failures.

The Australian Securities and Investments Commission (ASIC) has released its annual insolvency statistics for the financial year 2023-24, revealing an increase in the number of companies entering external administration. 

Over 11,000 businesses underwent this process for the first time during the period, surpassing the peaks seen in 2011-12 and 2012-13. 

However, when considered proportionately, the current figure remains lower. 

In 2012, approximately two million companies were registered in Australia, compared to nearly 3.4 million today, meaning the rate of insolvency relative to the total number of companies has decreased from 0.53 per cent in 2012-13 to 0.33 per cent in 2023-24.

The data highlights a 39 per cent year-on-year increase in external administrations, underscoring significant distress in several key industries. 

The construction sector led the way with 2,975 insolvencies, accounting for 27 per cent of the total. 

This was followed by accommodation and food services with 1,667 cases (15 per cent) and other services with 1,039 cases (9.3 per cent). 

These three industries together represented over half of all insolvencies.

A substantial rise in restructuring appointments was also recorded, with a more than 300 per cent increase compared to the previous year. 

Restructuring appointments now constitute 12.9 per cent of all external administrations. 

The small business restructuring initiative, introduced to assist companies with liabilities not exceeding $1 million, allows these businesses to retain control while formulating a restructuring plan with the help of a practitioner.

Since the introduction of the small business restructuring framework on 1 January 2021, 573 companies have completed their plans by 30 June 2024. Of these, 89.4 per cent remain registered, while 5.4 per cent have entered liquidation and 5.2 per cent have been deregistered.

On a state level, New South Wales (NSW) recorded the highest number of insolvencies at 4,634, followed by Victoria (VIC) with 2,862, Queensland (QLD) with 2,036, and Western Australia (WA) with 733. South Australia (SA) saw 454 cases, the Australian Capital Territory (ACT) had 193, Tasmania (TAS) had 94, and the Northern Territory (NT) had 43 cases.

The number of registered liquidators, who are pivotal in managing the insolvency process, has seen a slight decline over the past year. 

As of 30 June 2024, there were 642 registered liquidators in Australia.