An analysis conducted by Prushka Fast Debt Recovery on data sourced from court records has indicated that, between January 2018 and December 2018, the number of wind-ups jumped to 3,601, up from the 3,155 wind-ups reported in 2017.
The 2017 figure was a historically low number for Australian businesses.
The analysis also indicated that there has been an increase of more than 40 per cent in the number of private applications since 2017, with the 1,366 individual applications representing a sharp increase compared to the 932 received last year.
According to the research, Victoria experienced the highest rate of company wind-ups at 1,138, followed closely by NSW at 1,098. Queensland had 795 company wind-ups while Perth had just 321. The other states collectively had 249 company wind-ups.
Prushka chief executive Roger Mendelson said that these figures could be a very early indication of the corporate sector being in trouble.
“This is a ‘canary in the coal mine’ event; however, these figures are still low, which is promising for the Australian economy, and in particular small businesses,” Mr Mendelson said.
“Small businesses should view this spike as an early warning sign of what may follow, particularly for Victoria [which] reported the highest figures year-on-year with a 61 per cent jump.”
The ATO continues to be by far the largest petitioner, with the ATO and other government organisations accounting for 62 per cent of all petitions issued. Private wind-ups account for 38 per cent of total petitions issued and represents a 47 per cent increase over the 2017 year.
“These figures are significant, as they indicate a trend for both the ATO and private creditors to substantially lift liquidation actions.”
Mr Mendelson said that these figures are “just the tip of the iceberg, as there would be a far larger number of companies which are technically insolvent but which no creditor is prepared to spend the money to wind them up”.
Costs for winding up, including disbursements, are about $7,000 to $8,000.
“There is a lead time of about six months from the time a debt is in default until the time there is application to wind-up, so I expect this trend to continue, with more wind-ups looming,” the chief executive said.