The “State of the Personal Insolvency System Report” (https://www.afsa.gov.au/about-us/statistics/state-personal-insolvency-report) says that: “Historically, there has been a strong correlation between corporate insolvencies and business-related personal insolvencies (0.8), and between corporate insolvencies and non-business-related personal insolvencies (0.7). Corporate insolvencies have historically seen increases/decreases in volumes between 9 to 12 months ahead of increases/decreases in non-business-related personal insolvencies.”
The report continues … “In the past financial year, corporate insolvencies (including administrations, restructuring and liquidation) have increased by 62% from 4,912 cases in 2021–22 to 7,942 cases in 2022–23. These volumes exceed the pre-COVID-19 average by 3%. Compared to corporate
insolvencies, personal insolvencies (including business-related) have risen more slowly over the same period and have not yet trended back to the pre-COVID-19 average.
Risks and options for small business and sole traders
Faster increases in corporate insolvencies have highlighted the different risks and options for small businesses and sole traders. Some people who operate small businesses or are sole traders can be personally liable for debts incurred and may appear in the corporate or personal insolvency systems. For those who are personally liable, bankruptcy through the personal insolvency system may be the most suitable option.
Due to the high average amount of liabilities for business-related personal insolvencies, and correlations with the corporate insolvency system, AFSA continues to explore ways to work with co-regulators to provide consistent and streamlined advice for people who may enter the insolvency system through different channels.”
Check out AFSA’s website for further information about personal insolvency at the following link: https://www.afsa.gov.au/about-us/statistics/state-personal-insolvency-report
Business Debt Rescue provides a holistic debt relief solution that can be an alternative to immediate insolvency.
Our debt relief solution aims to achieve any or all of the following outcomes for businesses:
- Negotiating with creditors for reductions and waivers in debts based on the current business circumstances.
- Negotiating with creditors to reduce or suspend payments on interest.
- Negotiating creditor payment plans within your estimated budget to make paying back business debts manageable over time.
- Where successful, avoiding a 5-year black mark on a business credit file in contrast to the outcome of insolvency.
- Where successful, avoiding a black mark on a director’s credit file for 10 years in contrast to the outcome of insolvency.
- Minimising contact between the client and the creditors where possible.
- A holistic business debt relief solution that is an alternative to immediate insolvency.
The Business Debt Rescue team are experienced, non-judgemental professionals who work to prepare tailored solutions for our clients. Contact us today for a free quote.
