Risk Watch Essentials August 2021

Risk Watch Essentials August 2021

The tables below summarise the data essentials captured from our daily Risk Watch publication, which provides a synopsis of the insolvency market for August 2021.

In addition to the tables below, six (6) companies appointed a Restructuring Practitioner during the month of August 2021 in relation to the Debtor in Possession restructuring process for small businesses.

Covid

The tables and graphs below show the Covid lockdowns and stimulus measures introduced towards the end of June 2021 have caused a material reduction in the number of reported insolvency events in July and August 2021 compared with June 2021. As illustrated in the final graph below, when compared to the same time in 2019 the number of insolvency events in August 2021 is approx 50% below pre pandemic levels.

No. of Registered Liquidators in Australia as at August 2021

Registered Liquidators Australia    NSW    VIC    QLD    WA    ACT    SA    NT    TAS
TOTAL 648    248 (38%) 157 (24%)    112 (17%)    63 (10%)    10 (2%)    46 (7%)    3 (<1%)    9 (1%)

Winding Up applications filed with the Court in August 2021

Winding Up applications Australia    NSW    VIC    QLD    WA    ACT    SA    NT    TAS
TOTAL 114    48 (42%)    30 (26%)    27 (24%)    5 (4%)    1 (1%)    2 (2%)    0 (0%)    1 (1%)

Analysis:

A total of 114 Winding Up applications were filed throughout Australia in August 2021, the majority of which were in New South Wales (48 or 42%), Victoria (30 or 26%) and Queensland (27 or 24%), and Western Australia (5 or 4%). There were smaller numbers of winding up applications filed in South Australia, Australian Capital Territory and Tasmania and none in the Northern Territory.

There were four (4) winding up applications filed by the ATO in August 2021.

Formal Appointments in August 2021

Formal Appointments Australia    NSW    VIC    QLD    WA    ACT    SA    NT    TAS
TOTAL 476    194 (41%) 112 (24%) 90 (19%) 28 (6%) 25 (5%) 24 (5%) 0 (0%) 3 (1%)
Court Liquidations 56 16 (29%) 16 (29%) 18 (32%) 1 (2%) 0 (0%) 4 (7%) 0 (0%) 1 (2%)

Creditors'/Members' Voluntary Liquidation

357 148 (41%) 79 (22%) 63 (18%) 23 (6%) 25 (7%) 18 (5%) 0 (0%) 1 (0%)
Voluntary Administration 63 30 (48%) 17 (27%) 9 (14%) 4 (6%) 0 (0%) 2 (3%) 0 (0%) 1 (2%)

Analysis:

There were a total of 476 formal appointments throughout Australia in August 2021, the majority of which were in New South Wales (194 or 41%), Victoria (112 or 24%), and Queensland (90 or 18%).

Comparison of Pre-Covid FY 2020 and FY 2021 Formal Appointments

The graph below shows the formal appointments on a month by month basis (January to August) pre-covid (2019) compared with 2021. The number of formal appointments continue to be well below the pre-covid numbers and show no sign of increasing to pre-covid numbers. This is likely due to some businesses continuing to rely on Government pandemic relief measures and others which are trading whilst insolvent in the hope of better days or have closed their doors but not entered formal insolvency.

Rodgers Reidy is one of the foremost providers of insolvency, forensic and reconstruction services to distressed businesses throughout Australia, New Zealand and Asia. With a strong commitment to integrity and the community, Rodgers Reidy provides a professional and quality service, offering innovative, cost effective solutions.  Please contact any of our directors by clicking the appropriate office below for an initial consultation free of charge.

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