Sunday Herald Sun
Businesses on the brink
Crisis worsens after JobKeeper
THE number of Victorian businesses either collapsing or winding up their operations amid financial stress is on the rise in the wake of JobKeeper ending, early data shows.
An analysis of insolvency numbers provided by the Australian Securities and Investments Commission shows 21 Victorian companies called in a liquidator or had one forcibly appointed by the courts in the first week of April.
That coincided with the JobKeeper wage subsidy coming to an end, along with rental deferral periods provided by landlords.
The latest weekly read on liquidations — which includes the Easter holiday period which slowed insolvency activity — is up from 15 in the first week of March and three in the first week of February.
The ASIC data tracks companies, meaning it does not include sole traders, the most common small business.
CreditorWatch chief Patrick Coghlan said while it was early days in terms of the postJobKeeper business outlook, his credit data agency had noticed a rise in the number of clients registering defaults.
This is where a business registers a notice that one of its customers has failed to pay a bill and is a key indication of looming business failure.
“Defaults are slowly rising and that is the first indicator that a debtor is having some sort of issue,” Mr Coghlan said.
“We will typically see a default registered around six months before an administration comes and we know there is a serious correlation between a default being registered and an administration in the future.”
Mr Coghlan said insolvency numbers had been rising since the start of the year but remained around 45 per cent lower than what they were before the pandemic. Stimulus measures such as JobKeeper, as well as loan and rent deferrals resulted in insolvencies hitting a 20-year low last year.
While a tidal wave of postJobKeeper insolvencies is no longer expected, Mr Coghlan said levels were bound to return to historical levels as lenders, landlords and suppliers demanded payment.
Small Business Australia chief Bill Lang said the pandemic had produced “a twotiered economy” with businesses which have been able to return to either near or full trading feeling confident, while those still hit by restrictions fearing for their survival.
“We are still being contacted by businesses struggling with landlords and debt that has grown through the pandemic. Many have sold their homes, cashed in their super and have nothing left,” he said.