Insolvencies to stay high in 2013

Insolvencies to stay high in 2013

The high Australian dollar and tight credit markets are expected to contribute towards a high number of company insolvencies over 2013.

The number of Australian companies going broke is expected to stay high over 2013, says accountancy firm Taylor Woodings.

Taylor Woodings, a specialist in corporate recovery and restructuring, released its analysis of the Australian Securities and Investments Commission's latest monthly insolvency data on Wednesday.

In January 2013, 628 companies had external administrators appointed - the highest figure on record for January and 21.2 per cent above January 2012.

Company collapses for the first seven months of the financial year totalled 6,053 - the second highest figure for the period.

Corporate failures in January doubled in Western Australia from 29 to 58 but fell in NSW from 194 to 189, compared with January 2012.

"While the economic data for January showed signs of improvement in the economy, we predict 2013 will continue to see high levels of insolvencies due to continued volatility in a number of sectors, the high Australian dollar and tight debt and equity markets," Taylor Woodings said.

Taylor Woodings partner Andrew Schwarz said the rise in January insolvencies reflected a continuation of a trend since the global financial crisis in 2008.

Until recently, consumer confidence had remained low; the Australian dollar was still high; credit and equity markets remained fairly tight; and business investment had been low.

The construction, manufacturing, tourism and retail sectors continued to hurt. Anecdotally, the mining services sector looked like coming under increasing pressure amid lower commodity prices and the tapering-off of the mining boom.

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Tags Australian Securities and Investments Commissioncompany collapsesinsolvencies

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