Personal bankruptcies are on the rise while business insolvencies have fallen, according to statistics from the corporate regulator.
The Australian Securities and Investments Commission statistics for the February 2014 period indicate corporate insolvency is showing signs of improvement.
According to the data, 1059 insolvency appointments were made across Australia in February 2014, down by approximately 20% from February 2013. NSW recorded the highest number of appointments in February 2014 at 369, down from 443 the previous year.
Jim Downey, principal at JP Downey and Co, told SmartCompany there has been a marked downturn in insolvency appointments since last year.
What will the election mean to you?
Sign up to our free newsletter, including this weekend’s coverage of the election.
“It depends on where we are in the economic cycle and a change of government. There is a myth that liquidators only get busy when the economy is at its lowest ebb, but we go quiet at the top and at the bottom.”
In contrast, personal bankruptcy cases have risen sharply in the March quarter of 2014, according to statistics released by the Australian Financial Security Authority.
Personal insolvency cases jumped by 6.1% in March 2014 compared to the previous corresponding period. Victoria and Western Australia recorded the highest increases in total personal insolvencies, increasing by 15.2% and 19.5% respectively.
Gess Rambaldi, partner at Pitcher Partners National Personal Insolvency Practice, said the restructuring of the manufacturing industry in Victoria and the slow-down in the Western Australian mining industry are the most probable causes of the increase in insolvency activity across the two states.
“Victoria and WA have surged ahead because of the shake-up in the manufacturing sector and the decline in the mining industry,” he said in a statement. “NSW has been more consistent, not experiencing the level of redundancies in the other two states.”
Rambaldi said the total number of debt agreements has increased from 2376 for the March 2013 quarter to a record high for the March 2014 quarter of 2678.
“The increase in debt agreements is most probably due to targeted marketing with the higher numbers in Queensland attributed to areas like the Gold Coast – the home of debt agreement administrators – selling these types of agreements, rather than the specific location of a debtor.”