New personal insolvencies across Australia increased 5.3% in 2024-25, to 12,257 up from 11,644 in 2023–24. Business related personal insolvencies accounted for over 28% of these, although well over 40% of bankruptcies.
New company insolvencies increased 33.2%, to 14,722, from the 11,053 companies recorded in 2023–24.
In context:
- The 12,257 personal insolvencies come from an adult population of around 20 million; they totaled 37,000 during the 2008 GFC.
- The 14,722 corporate insolvencies come from a total of over 3.5 million registered companies, and the number of insolvencies compared to the number of companies registered is 0.41%, well below the prior peaks in the 2011–13 financial years of around 0.5%.
- But we don’t know much about small business insolvencies, involving both personal and corporate debt and assets.
Personal insolvencies – a plateau to a slide
AFSA reports that new personal insolvencies across Australia increased 5.3% in 2024-25, to 12,257 up from 11,644 in 2023–24.
What AFSA terms “business-related personal insolvencies” accounted for 28.8% of these new personal insolvencies (3,536), up 2.6% from the previous financial year (26.2% – 3,046).
Those low numbers have continued into August 2025, when there were 1,095 new personal insolvencies, a drop from 1,247 in July 2025 and lower than August 2024, which recorded 1,119.
Construction, health care and social assistance and transport, postal and warehousing were the main contributors, although each recorded falls.
Breakdown – 56% bankruptcies, 42% debt agreements
Of these 12,257, 6,930 were bankruptcies, 5,093 were debt agreements, 210 were personal insolvency agreements and 24 were insolvent deceased estates.
This shows an increased proportion of debt agreements in comparison to bankruptcies. This has continued into August 2025, with 589 bankruptcies, 485 debt agreements and 18 personal insolvency agreements.
Business related matters – over 40%
As to the 28.8% of “business-related personal insolvencies”, given that business failures generally involve threshold levels beyond those set for debt agreements, a better figure is to extract the proportion of business bankruptcies and Part Xs – being 46.2% and 44.4% respectively in August 2025.
Why the low numbers?
AFSA puts these continued low numbers to changed creditor behaviour after the 2017-19 Hayne Royal Commission, changed debtor behaviour during the COVID-19 pandemic, and low unemployment. As a result, AFSA says, personal insolvencies have fallen from around 32,000 around 8 years ago to their current levels.
AFSA also says that it has taken a more proactive approach in its education, compliance and enforcement activities. One of its key priorities is to ensure individuals are aware of their rights, including access to free advice.
The unreformed severe consequences of a 3 year bankruptcy might be another reason for the low levels.
Company insolvencies – levelling out at around 1,200 to 1,300 per month
In contrast, at 30 June 2025, of Australia’s 3.5 million registered companies, only 14,722 entered external administration in 2024–25 for the first time, though this was up 33.2% from the 11,053 companies recorded in 2023–24.
ASIC says that the increases over recent years in the number of companies entering external administration has now started to moderate, levelling out at around 1,200 to 1,300 per month.
The ratio of companies entering external administration (0.41%) is up from the 12 months to 30 June 2024 (0.33%) but still well below the prior peaks in the 2011–12 and 2012–13 financial years of 0.56% and 0.53%, respectively.
Comment
These numbers do not tell us too much but the significant slide in the numbers of personal insolvencies over the years may indicate a major shift in thinking.
Corporate insolvencies of businesses are also relatively low, and, perversely, may indicate a lack of market competition and business dynamism from which the economy is said to suffer. As the Productivity Commission explained to the 2023 PJC inquiry,
“insolvency and business exit play a very important part in maintaining the dynamism of the economy. They ensure that it’s an innovative and constantly changing economy. Whilst there’s an element of pain associated with financial distress, sometimes business exit is an important way for us [to] get economic growth through innovation and different business models, and in some industries in particular that is a mechanism by which innovation and productivity growth occur”: [3.22].
One major blind spot is the extent to which a corporate insolvency leads to a personal insolvency of the business owners. This may be through personal guarantees, or personal tax liabilities; or the owner may incur liabilities to support the business. Review or reform of insolvency law for small business is difficult without that data. A past Senate committee recommendation to gather and collate both personal and corporate insolvency statistics was never pursued.
