Adelaide Now: Rise in businesses going insolvent in past month in South Australia as rate hike looms
Business insolvencies are continuing to rise in South Australia as another interest rate hike looms, and ahead of a critical holiday slowdown period that could make or break businesses on the edge.
According to statistics from the Australian Securities and Investments Commission, 34 South Australian companies fell into administration or liquidation in October, up from 26 in September and 22 in August.
The latest list includes boutique building company Residence Building Group, which went into voluntary administration in October with a multimillion-dollar debt pile.
It followed several other builders who have hit the wall this year, including Qattro, Felmeri Group and 7 Star Constructions.
Oracle Insolvency Services managing partner Nick Cooper said a more aggressive approach from the Australian Taxation Office in its debt collection activities was a major factor behind the rising number of insolvencies, which was also leading to an uptick in personal insolvency agreements and bankruptcies.
He said the coming weeks could be crucial for many vulnerable businesses.
“Often there can be a bit of a flurry of insolvencies just before Christmas,” he said.
“Depending on the nature of their business, a lot of businesses close down obviously after Christmas and for most of January, but they’ve still got their payroll obligations to pay.
“So if they’re running short on cash now that’s not a good sign, because they’ll need to find the cash to pay wages through the closure over Christmas, often without any income at all.”
It followed several other builders who have hit the wall this year, including Qattro, Felmeri Group and 7 Star Constructions.
Oracle Insolvency Services managing partner Nick Cooper said a more aggressive approach from the Australian Taxation Office in its debt collection activities was a major factor behind the rising number of insolvencies, which was also leading to an uptick in personal insolvency agreements and bankruptcies.
He said the coming weeks could be crucial for many vulnerable businesses.
“Often there can be a bit of a flurry of insolvencies just before Christmas,” he said.
“Depending on the nature of their business, a lot of businesses close down obviously after Christmas and for most of January, but they’ve still got their payroll obligations to pay.
“So if they’re running short on cash now that’s not a good sign, because they’ll need to find the cash to pay wages through the closure over Christmas, often without any income at all.”
Last week Insolvency Australia launched a new insolvency helpline to connect businesses and individuals in financial distress with insolvency specialists.
The service offers access to a panel of insolvency specialists for a free 15-minute consultation.
Insolvency Australia chief executive Gareth Gammon said it would act as “an important lifeline” for many business owners.
“Australia’s insolvency numbers recently reached their highest levels this year, and the cost-of-living crisis is putting pressure on businesses and individuals alike,” he said.
“More and more people are finding themselves in financial distress, but many might not know who to turn to. It’s why we have put together this independent team of highly qualified business and personal insolvency specialists to help navigate the process.”
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