The most recent BWA Insolvency report for the September quarter revealed a 5% increase in insolvencies to 777 compared to the previous quarter, but a 6% decrease compared to the same period in 2024.
For BWA Insolvency principal Bryan Williams, the insolvency figures illustrate an economic “game of two halves.”
“On one side, you’ve got irrepressible forward-looking indicators – share prices rising, real estate agents bouncing back, building permits up, and even ready-mix concrete demand forecasts improving,” he said.
“But then there’s the other half: companies weighed down by cost inflation, credit tightening, and enforcement for unpaid taxes.”
“For those burdened with debt that earnings can’t service, the future is bleak,” Williams added.
Williams said there was a noticeable toughening of attitudes among creditors, which he referred to as healthy destruction.
“Creditors are accelerating the exit of firms that can’t recover,” he said. “ It’s a harsh reality, but it’s shaping the market.”
“There is still all those companies hanging on by the end of their fingers, and that’s quite a pipeline, I imagine it will be well into the third quarter of next year before we see a downturn in actual liquidations.”
Construction continued to be the sector with the highest number of insolvencies, totalling 192 in the quarter.
This was slightly down from both the previous quarter and the same period last year.
“Although it appears over-represented in insolvency data, its failings are proportionally low compared to its economic weight, especially when you compare it to sectors like hospitality, which runs a close second in insolvency stakes but contributes far less to GDP.”