Insolvency means when a person or business cannot pay off its debts due to financial stress. Insolvency is deeply related to a nation’s economy and overall financial structure.
Business insolvency statistics in Australia show us the performance of Australia’s business sector and the overall corporate well-being of the country.
Insolvencies Statistics in Australia
Insolvencies statistics in Australia are usually subdivided into two subdomains; Personal and Corporate insolvencies. The post-pandemic finances at both personal and corporate levels haven’t stabilized after COVID. Here are several personal and corporate insolvency statistics in Australia.
Personal Insolvency Statistics in Australia
According to the Australian Financial Security Authority (AFS), around 2410 personal insolvencies were reported in the September quarter of 2022. That includes 953 debt agreements, 25 personal insolvency agreements, 6 insolvent deceased estates, and 1427 bankruptcies. Around 90.6% of the bankruptcies were voluntary (by debtor’s petition), and the remaining ones were involuntary.
There’s an overall decrease of 8.1% in the new personal insolvencies in Australia in 2022 compared to 2021. In 2022 (January-July), around 4177 formal insolvency meetings were held in Australia. That number is projected to go much higher than the 6243 insolvency appointments made in 2021. Here’s a graph showing personal insolvency statistics in Australia from 2007-2021.
Corporate Insolvency in Australia
We can’t deny that the corporate sector worldwide took a major hit during the pandemic. But the Australian market managed to survive and improve even in the global disaster of COVID-19. According to a report by Statista, corporate insolvencies declined heavily in numbers in 2021 compared to previous years.
Only 4235 registered companies entered external receivership during 2020-2021. In the financial year of 2021-2022, we saw 6049 corporate insolvency appointments.
Here’s a graph showing the total number of companies entering external receivership from 2013 to 2021 (2021-2022 not included).
That number justifies the overall decline in corporate bankruptcies in Australia. Following the COVID-19 lockdowns, the Australian government timely planned to deal with the situation by effectively implementing corporate insolvency reforms at the start of 2021. These reforms included debt restructuring, and simplified liquidation, for businesses with less-than-$1milAUD liabilities.
Projected Insolvency Conditions
Insolvency statistics in Australia show that personal insolvency appointments hit a historical low in 2022. Even though the Australian economy faces many challenges in the global market, economists predict the personal insolvency appointment in 2022 to be around 9,500. Personal insolvency numbers keep falling despite increased enforced debts and strict financial regulations.
According to the corporate sector performance in terms of solvency, one can conveniently project that the financial environment of Australia is deteriorating year by year. Inflation is projected to be at 7% in early 2023, and corporate insolvency numbers are nearly the same as of 2021.
In 2022-2023, economists projected corporate insolvency appointments to be around 6,500. This number may seem high compared to previous years, but it is still far from the long-term average of 10,700 appointments per year.
Given all the insolvency statistics in Australia, it’s concluded that the overall insolvency percentage is declining. The personal insolvency sector is performing exceedingly well than the corporate sector. Insolvency in Australia has overall a lot lower rate than average over the past years.