Construction firms were one of the sectors with the highest amount of company collapses last financial year.
Construction firms were one of the sectors with the highest amount of company collapses last financial year.

The firms most at risk of collapse

CONSTRUCTION firms, restaurants and retailers are among the sectors most vulnerable to company collapse, according to a new report out today.

The Australian Securities and Investments Commission has released its annual insolvency statistics report for the financial year to June 2018, with overall administrator lodgements slightly down from 8425 to 8202.

Across the country, construction companies accounted for 22 per cent of insolvency lodgements, followed by accommodation and food services at 14 per cent, and retailers at 7.8 per cent.

Other services, which include business and personal services, were listed together, and accounted for the bulk 28 per cent of company collapses.

The current financial year has already seen a number of high-profile companies collapse into administration, including chocolate chain Max Brenner, and long-standing menswear business Roger David.

A number of construction companies have also fallen into administration, including Sunshine Coast-based Cleary Group.

Queensland companies accounted for 20.6 per cent of total collapses, behind New South Wales and Victoria.

Most of the companies were small businesses, with 78.2 per cent related to companies with less than 20 employees, and more than 65 per cent with than five.

The top three causes for companies collapsing were listed as inadequate cash flow or high cash use, followed by poor strategic management of business and trading losses.

External administrators alleged misconduct in more than 86 per cent of reports, and reported more than 20,000 possible breaches to ASIC.

The vast majority related to civil obligation breaches with criminal misconduct allegations rising, either before or after the administration, from more about 15 per cent of cases.



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