Company collapses surge in February

Company collapses surged 117 percent to a record high in February, with Queensland recording an increase of 122 percent

April 9, 2012

Company collapses surged 117 percent to a record high in February, with Queensland recording an increase of 122 percent.

According to the latest analysis of ASIC’s recently released insolvency figures by Taylor Woodings, company collapses topped 1,123 in February, the highest monthly insolvency figure on record, and 44 percent higher than the five-year monthly average of 780.

Corporate failures increased in all states including: New South Wales – up 134 percent to 453; Queensland – up 122 percent to 273; and WA – up 114 percent to 62. Queensland experienced its highest number of collapses on record.

Court-ordered wind ups jumped by 468 percent, from 79 to 449, a lag indicator reflecting increased Australian Tax Office-led applications from up to a year earlier. Creditor wind-ups also increased, up 56 percent to 408.

Taylor Woodings says that while historically there is an uplift in insolvencies during February following the quiet Christmas/New Year period, this year February is 31 percent higher than February 2011 and 47 percent higher than the five-year February average of 766.

The insolvency specialist says the latest insolvency figures reflect the difficulties facing many retail, tourism, building and construction and property development businesses with the global financial crisis continuing to have a lag effect.

It notes that despite the mining boom, the resource-rich states of Queensland and WA reported record and near-record high insolvencies.

Taylor Woodings says a comparative analysis of WA and Queensland administrations with company income from sales of goods and services (ABS Quarterly Business Indicators Survey) demonstrates the two-speed economies operating in these states.

While business revenue has grown steadily, both states have simultaneously experienced increasing corporate collapses.

This indicates that in Queensland and WA the thriving mining sector is drawing ‘oxygen’ from the non-mining sectors of the economy, the firm suggests.

In Queensland, the record high company collapses are due largely to the distressed commercial and coastal property market and the increased appointments of receivers by secured creditors.

In addition, the depressed building sector is having a flow-on effect to almost all parts of the state’s economy.

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