Businesses are facing a critical period as Christmas approaches, with insolvencies in Queensland rising by nearly 19 per cent in November. This increase signals a challenging economic environment, especially for sectors such as construction and food services.
Morningside’s Struggling Businesses
In Morningside, companies like 365 Construction Services recently announced their entry into voluntary liquidation. The company, part of the Morningside-based 365 Services Group and provided services like painting and landscaping, was forced into liquidation due to challenging economic conditions.
All employees, including the director, are owed entitlements, reflecting the depth of the crisis. The liquidator, Johnathan McLeod, noted that the director cited the economic downturn as the primary reason for the company’s failure.
The broader impact on the 365 Services Group, which includes cleaning, painting, landscaping, and property maintenance services, remains uncertain. The group’s website has been shut down.
Industry-Wide Observations and Predictions
Deloitte Australia’s lead partner of Queensland Restructuring Services, Richard Hughes, highlighted the increasing trend of insolvency numbers, which are now aligning with pre-Covid levels.
The upcoming Christmas season is viewed as a pivotal time for businesses, with the outcome potentially shaping the economic landscape for the early months of 2024. Mr Hughes emphasised the impact of cost-of-living pressures and consumer confidence on businesses, particularly if the Christmas sales period falls short of expectations.
In November, Queensland saw 101 liquidation or administration appointments, a notable increase from the 85 recorded in October and the same number in November of the previous year.
Andrew Weatherley from WCT Advisory Group observed that construction and food services are experiencing similar levels of insolvency. He noted an increase in food service businesses seeking help or opting for liquidation, a trend expected to persist. Mr Weatherley also pointed out the anticipated pressures on the food industry post-Christmas, with many cafe and bar owners planning to close or liquidate after the holiday season.
Government Actions and Business Responses
The situation is compounded by actions from the Australian Tax Office (ATO), which is issuing director penalty notices and statutory demands, adding to the challenges for businesses and insolvency professionals.
Jarvis Archer, head of business restructuring at Revive Financial, noted that businesses are responding to these pressures by laying off staff and seeking small business restructuring engagements, hoping to survive by reducing debts to manageable levels.
Published 13-Dec-2023
