Australian personal insolvencies in 2019-2020 have continued to fall, quite dramatically, of over 23% on last year, and over 35% on the June 2019 quarter.
2019-2020
In 2019-2020 there were:
- 12,450 bankruptcies, their lowest annual level since 1989–90 and an 18.8% fall from last year. Those in South Australia and Tasmania reached their lowest annual levels since records began in 1986–87.
- 8,147 debt agreements, their lowest annual level since 2010–11 and a fall of 29.5% from last year.
- 20,762 personal insolvencies all up, being their lowest annual level since 1995–96 and a fall of 23.3% from last year. South Australia reached its lowest annual level since records started in 1986–87.
April-June 2019, 2020
In the April-June 2020 quarter, covering the height of the crisis, the number of new personal insolvencies overall fell 35.1% compared to the June quarter 2019, being:
- 2,205 bankruptcies, a 42.4% fall;
- 1,990 debt agreements, a 25% fall.
Business related
And 23.2% of new debtors entered a business-related personal insolvency, the highest proportion being in Western Australia (26.4%). This appears to be a high percentage.
Comment
The largest falls appear to in the last April-June quarter, during the COVID-19 crisis, said to be because of the extent of government assistance being provided and because of the limitations placed on creditors pursuing their debts. The extent of that quarter’s fall continuing may be further confirmed by the fortnightly statistics, to 26 July 2020, shortly to be released.
AFSA
There is no comment being made about the financial position of the government agency AFSA, which includes the Official Trustee in Bankruptcy. AFSA could be impacted by the reduced number of bankruptcies to administer, and by what would be the reduced number of statutory documents it can issue on behalf of creditors and trustees – and for which it charges fees. Also, its statutory charge on the value of realised assets may be affected by falling asset values.
There is nothing to suggest any concern about AFSA but it is interesting to recall that the UK government’s Insolvency Service was reported (only by a newspaper) in 2013 to be
“all but insolvent. … ‘It is fair to say that if this [were] a company it would be in deep trouble’”.
The problem was said to be that the Insolvency Service was dependent on fees and asset recoveries from insolvent estates and their numbers had fallen. And its cost cutting was
“hamstrung by its obligation to provide services even when there is no prospect of recovering fees from bankrupt people or companies”.
Trustees
The question whether that is the case with some of Australia’s private insolvency practitioners has been raised.
At the same time, the personal insolvency numbers are expected to change, upwards, just as dramatically; a question is when.
