WA business failures double over two years in post-pandemic bounce

Business failures have doubled in Western Australia over the past two years, with tax officials and banks stepping up efforts to chase debts. More than 730 companies hit the wall in the 12 months to June, according to Australian Securities and Investments Commission data. That’s up from a very low base of only 372 insolvencies in the 2022 financial year — a time when rules were relaxed due to the COVID-19 pandemic. The WA record was 1,013 in 2015-16. Hardest hit were construction (151 insolvencies) and hospitality (107) in the year to June. National insolvencies tracked at their highest level since ASIC reporting began in 2000. The corporate cop’s records show 11,000 businesses went under. It follows data by Alares showing court winding up applications — by the Australian Taxation Office and other creditors — in May were at the highest level in at least five years. The big banks have also scaled up their pursuits. The ATO dialled back actions during the pandemic but the pace picked up last year. WA Insolvency Solutions partner Jimmy Trpcevski said there were signs WA’s numbers could worsen. He pointed to increased moves by the ATO to recover debts and banks becoming more stringent on refinancing. Industries where cash flow was most crucial — especially construction — could be most exposed. “It’s going to be a gradual problem,” Mr Trpcevski said. “That industry is already fickle enough . . . a bit of external pressure could break (businesses)“. He said there’d likely be half a dozen or so building businesses effectively in a state of limbo until creditors move. “We urge those companies . . . get that early intervention,” he said.