Company closures in March 2023 highest since 2019

March 2023 was the highest monthly corporate insolvency total since July 2019 with 828 companies entering some form of insolvency administration.

March was just the third time insolvencies have edged above the 800 mark since it was a regular occurrence back in the tail end of the GFC in 2015/16.

828 appointments in March is a 79% increase over the previous (somewhat COVID affected) March number of 464.

The increase can be attributed to a jump in court liquidations, Receiver & Manager appointments and the new Small Business Restructurings.

Court liquidations are on the path back to pre-COVID numbers, but still have a way to go. Government protections caused court liquidations to drop from an average of 191 per month in 2019 to 61 per month in 2020. In the last two months Court Liquidations have crept above the 100 per month mark.

Bank initiated Receiver and Receiver & Manager appointments were also up in March 2023. There were 33 Receiver appointments, up from an average of 9 per month in the preceding 12 months, and 66 Receiver/Manager appointments up from an average of 26.

We are also seeing a trend of an increasing number of the new Small Business Restructuring appointments. There were 54 SBRs in March 2023, up from an average of 26 per month in the preceding 12 months.
State by state, NSW, Victoria and Queensland have seen large increases of 43%, 57%, and 68% on the average of the previous 12 months respectively.

Industry wise, Construction is still the worst affected area making up 30% of all appointments. Retail is a distant second at 8%.

We suspect a driver in the increased insolvencies is the ATO ramping up their debt pursuit programs. It wasn’t until late in March, but we have started to see the ATO issuing letters warning directors of possible Director Penalty Notices again. When they did a batch of those last year it triggered a 6 month run of high insolvency numbers.