The new Minister for Small Business, the Hon Dr Anne Aly MP, will be interested in the latest insolvency figures from ASIC and AFSA, and other news about that sector. ASIC’s corporate quarterly insolvency update, issue 36, of June 2025, indicates a quiet insolvency scene, as does AFSA’s bankruptcy statistics update. Disparate law reform is evident between personal and corporate.
Part 5.3B
ASIC’s Report 810 – Review of small business restructuring process: 2022–24, says that the Part 5.3B process is “keeping struggling companies afloat”, and more and more of them.
The 448 SBR appointments in 2022–23 have risen to 1,425 in 2023–24 with 3,000 anticipated for 2024–25; all out of over 3.5 million companies.
Most plans were approved, but the rate of approval is declining. Most fulfilled plans paid dividends, at an average 21c/$. The median number of creditors involved was two (average: 4.2). The ATO was a creditor for at least 93% of companies where the restructuring plan was fulfilled.
Part 5.3B was introduced in 2021 in response to the then significant and continuing economic consequences of COVID-19. Its continuation might be the subject of a review.
Insolvencies generally
As to the broader scene, ASIC’s statistics show that only 13,413 companies entered external administration in the current financial year to 31 May 2025, out of the 3.5 million companies, though up 34.2% from the 9,993 companies recorded for the same period in 2023–24.
In context, while there were 29,000 external administrations in 2022-24, there were 850,000 new businesses created in that period: Treasury.
From June 2024 to May 2025, most were director-driven appointments (72.2%), comprising voluntary liquidations (41.6%), small business restructurings (20.1%) and voluntary administrations (10.5%). Creditor-driven appointments represent 27.8% of appointments, comprising court liquidations (19.4%) and controllerships (8.4%).
The ratio of insolvent companies in the 12 months to 31 May 2025 compared to the number registered (3,538,524) was 0.41%.
That is higher than the 12 months to 31 May 2024 (0.32%).
But it is still well below the previous peaks in the 2011-13 financial years of 0.56% and 0.53%, respectively.
In further ASIC news, there is a new user guide on Form 5602; advice whether an IP should submit a supplementary “discretionary” statutory report – s 533(2) – based on their professional judgment; guidance on the sustainability reporting requirements; a reminder to small business directors of their obligations to manage company money and assets appropriately; advice as to the use of ASIC email addresses, and Inside ASIC.
AFSA statistics
In contrast to corporate, bankruptcy and other personal insolvency numbers look like being below those of last year, and well below the long-term average.
AFSA has advised that, compared with April 2025, “personal insolvencies increased in May 2025”, by 14.
That is, there were 1,087 new personal insolvencies in May, rising from 1,073 in April 2025.
The total for the financial year to May 2025 is 11,418, the yearly figure looking to fall below AFSA’s earlier estimate of 13,400, and well below the long-term average of 23,100.
That 11,418 is out of an Australian population of 27 million. In 2009-10, there were 37,000 personal insolvencies from a population of 22 million.
From the Minister’s perspective, over 40% of bankruptcies came from people involved in a business.
Comment
Small business personal insolvencies are far fewer in number, despite sole or partnership operators constituting 70% of small businesses.
Government legislative initiatives for insolvent small business debtors comprise bankruptcy for a minimum of 3 years (introduced in 1924), or a Part X agreement for around 18 months (introduced in 2004).
The Minister might like to consider that.
Query in numbers?
The disparity in insolvency numbers between corporate and personal is interesting. The majority of ATO SME debt is owed by companies.
Might it be that at the SME level, directors see themselves as quite separate, too separate, from the company, as they have had explained to them, and thereby less concerned about ‘its’ compliance?
In contrast, an individual who incurs business debt knows up front that the liability is upon them.
Query whether directors obtain legal advice when their accountant sets up their corporate structure.
