Risk Watch Essentials - March 2021

Risk Watch Essentials - March 2021

New Debtor in Possession and Insolvency Laws

As detailed last month, from 1 January 2021, the Government introduced some core structural changes to the reconstruction and insolvency regime which include the following:

  • A Debtor in Possession restructuring process for small businesses, whereby a company can avoid liquidation and appoint a Restructuring Practitioner, for further information please follow the link below:
             www.rodgersreidy.com.au/small-business-restructuring-sbr
  • A simplified liquidation process, for further information please follow the link below:
              www.rodgersreidy.com.au/simple-creditors-voluntary-liquidations
  • Declaration of Eligibility for Temporary Restructuring Relief (“DETRR”) – if a company lodged a DETRR before 31 March 2021 it could provide up to four (4) months of additional relief from insolvent trading laws for companies seeking to appoint a Restructuring Practitioner.

During the month of March only twenty-one (21) companies across Australia lodged a Declaration of Eligibility for Temporary Restructuring Relief and only three (3) companies appointed a Restructuring Practitioner.

 Risk Watch Essentials - March 2021

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

No. of Registered Liquidators in Australia as at March 2021

Registered Liquidators Australia    NSW    VIC    QLD    WA    ACT    SA    NT    TAS
TOTAL   649    248 (38%)    161 (25%)    110 (16%)    64 (10%)    10 (2%)    46 (7%)        2 (<1)    8 (1%)

Winding Up applications filed with the Court in March 2021

Winding Up Applications Australia    NSW    VIC    QLD    WA    ACT    SA     NT    TAS
TOTAL 157    38 (24%)    82 (52%)    14 (9%)    13 (8%)    3 (2%)    5 (3%)    2 (1%)    0
(0%)

Analysis:
There has been a significant increase in the number of winding up applications in March 2021 compared with February 2021. There has only been one (1) winding up application filed by the ATO in either February or March 2021.

A total of 157 Winding Up applications were filed throughout Australia in March 2021, the majority of which were in Victoria (82 or 52%), New South Wales (38 or 24%), Queensland (14 or 9%) and Western Australia (13 or 8%). There were smaller numbers of winding up applications filed in the Australian Capital Territory, South Australia and Northern Territory and none in Tasmania during March 2021.

Formal Appointments in March 2021

Formal Appointments Australia    NSW    VIC    QLD    WA    ACT    SA    NT    TAS
TOTAL 531    217 (41%)      156 (29%)    86 (16%)    26 (5%)    16 (3%)    26 (5%)    1 (0%)    3 (1%)
Court Liquidation 48 18 (38%) 21 (44%) 3 (6%) 2 (4%) 0 (0%) 4 (8%) 0 (0%) 0 (0%)
Creditors'/Members' Voluntary Liquidation 392 166 (42%) 106 (27%) 75 (19%) 11 (3%) 11 (3%) 20 (5%) 0 (0%) 3 (1%)
Voluntary Administration 91 33 (36%) 29 (32%) 8 (9%) 13 (14%) 5 (5%) 2 (2%) 1 (1%)

0 (0%)

 Analysis:
There were a total of 531 formal appointments throughout Australia in March 2021, the majority of which were in New South Wales (217 or 41%), Victoria (156 or 29%) and Queensland (86 or 16%).

The number of Voluntary Liquidations in March 2021 has increased by 35% compared with February 2021.

Menu