<?xml version="1.0" encoding="ISO-8859-1"?> <docID>326912</docID> <postdate>2024-08-16 17:28:10</postdate> <headline>Owner distress as companies plunge into administration</headline> <body><p><img class="size-full wp-image-326916" src="https://citynews.com.au/wp-content/uploads/2024/08/20210603001546953567-original-resized.jpg" alt="" width="900" height="600" /></p> <caption>A record number of businesses were placed in voluntary administration last financial year. (James Ross/AAP PHOTOS)</caption> <p><span class="kicker-line">By <strong>Andrew Brown</strong> in Canberra</span></p> <p><strong>A record number of businesses have been placed into administration in the past year, an inquiry has been told, with advocates saying inflationary pressures are affecting multiple industries.</strong></p> <p>Officials from Australia's corporate watchdog told a parliamentary inquiry into the cost-of-living crisis that 11,053 businesses entered external administration in the 2023/24 financial year.</p> <p>ASIC commissioner Kate O'Rourke said while the proportion of businesses going into administration was not the highest, the past year had the most overall.</p> <p>"The highest number in terms of proportion remains 2011/12 ... Â the number we've got now is the highest number, but we've got more companies," she told the inquiry on Friday.</p> <p>Of insolvency reports provided to the watchdog in 2023/24, 53 per cent cited inadequate cash flow as one of the causes, along with poor strategic management and trading losses.</p> <p>Just under 10,000 personal insolvencies were also reported to the watchdog, well down on the 10-year average of 21,252.</p> <p>The small business and family enterprise ombudsman Bruce Billson said inflation was causing distress among the owners of companies.</p> <p>He said many businesses had been facing issues due to customers being more cautious with their spending.</p> <p>"There's no substitute for customers if you're running a business, and what's happening with people being more discerning in terms of their household expenditure... they're not spending as much," he said.</p> <p>"The customers are coming, but they're not spending as much."</p> <p>Mr Billson said inflation had also passed on direct costs to the businesses, adding to the pressure.</p> <p>"Lots of tenancy arrangements are adjusted by CPI, so you could find yourself in a difficult climate," he said.</p> <p>"Nearly half of all small business loans are secured by a residential property, most often someone's home. So it's not just about a livelihood, it's their life."</p> <p>The inquiry's chair, Liberal Senator Jane Hume, said the insolvency levels among businesses was alarming.</p> <p>"Businesses in all sectors were telling us that combination of stringent industrial relations reforms and red tape that comes with that are costing them dearly," she told reporters in Canberra.</p> <p>"It's preventing them from putting on more employees and taking away from the time that they can spend working within their businesses."</p> </body>