We have seen several quarters of progressively negative economic news and dire predictions of a coming recession caused by lockdowns and the COVID-19 pandemic. To date however the insolvency statistics do not yet reflect the much publicised (and anticipated) tsunami of corporate and personal insolvency appointments.
Personal Insolvencies: The Statistics
According to the Australian Financial Security Authority (AFSA) statistics released on 19 October 2021, personal insolvencies fell 12.3% in the September 2021 quarter compared to the 2020 September quarter.
- 2621 personal insolvencies were recorded in the September 2021 quarter;
- Representing a 12.3% reduction in personal insolvencies compared to same quarter last year;
- There was a reduction in personal insolvencies in all Australian states and Territories save for Tasmania.
- The September 2021 figure (2621) is a further reduction of 2.3% compared to the June 2021 quarter, where there were 2,682 personal insolvencies recorded.
In the September quarter 2021, 34.2% of bankruptcies were business related, this is a fall from 40.9% in the September quarter 2020. A copy of the AFSA media release can be accessed here.
Corporate Insolvencies: The Statistics
According to the Australian Securities and Investments Commission (ASIC) statistics released this month, October 2021, corporate insolvencies in Australia fell 1.95% in the September 2021 quarter compared to the 2020 September quarter.
- 1760 corporate insolvencies were recorded in the September 2021 quarter (compared to 1795 in September 2020 quarter and 2910 in September 2019 quarter);
- Representing a 1.95% reduction in corporate insolvencies compared to same quarter last year;
- There was a reduction in corporate insolvencies in Victoria, Queensland South Australia, Tasmania and the ACT and a slight increase in NSW, Western Australia and the NT.
- The September 2021 figure (1760) is however an increase of 29% compared to the June 2021 quarter, where there were 1356 corporate insolvencies recorded.
A copy of the ASIC Statistics can be accessed here.
All industry eyes remain focused on the Australian Taxation Office for when it will restart its debt collection and compliance programs, both of which were halted during the pandemic (and appears to remain halted).
Relevantly, we would expect to see a significant increase in insolvency appointments once the ATO resumes its debt collection activity (which is a question of when not if). Particularly so in circumstances where ATO collectable debt was up 28% to $34.1 Billion last financial year.
An anticipated uptick in insolvency appointments (as a result of ATO activity) is likely to gain further momentum in the coming months once other large creditors follow the ATO's lead. In other words, once in the ATO's debt collection activity resumes, other large corporate will likely follow. As to when...at an educated guess, we expect that a steady increase in insolvency appointments from early to mid 2022 may be likely.