The number of personal insolvencies in Australia have been falling since the start of the corona crisis, which some might find odd.
But it is consistent with past trends that show a lag between a financial downturn and its impact on the number of insolvencies.
There is also the 6 month stay, in effect, on new creditors’ petitions, although bankruptcy by sequestration order comprises only 10% of bankruptcies in Australia. And numbers were falling quite dramatically pre-virus, being at their lowest in 30 years.
AFSA’s fortnightly personal insolvency statistics
AFSA’s fortnightly personal insolvency statistics show that between 4 May and 17 May, 669 people entered into a new personal insolvency – bankruptcy, Part X or Part IX agreements – and with debtors mainly in retail, administrative and support and ‘other’ services.
Of those, only 139 were involved in a business, mostly construction, transport, postal and warehousing, and ‘other’.
This was a fall from 747 in the previous fortnight, and from 171 to 139 in business connections. Where AFSA could identify the industry, retail trade had the largest fall in numbers, from 24 to 9.
These fortnightly figures of 669 and 747 compare with 844, being the average number of people entering a personal insolvency per fortnight pre-coronavirus, between 1 July 2019 and 22 March 2020.
Temporary debt protection – s 54A
AFSA says it is expanding its statistics soon, including to show figures for temporary debt protection procedures, under s 54A. The stay period offered debtors against creditors’ claims under s 54A is now 6 months, and one would assume a take up of this protection. Although the stay under s 54A was introduced some years ago, and was pre-virus 21 days, it has never been much used by debtors, only 388 doing so in 2017-2018.
For AFSA’s statistics, see https://www.afsa.gov.au/about-us/statistics