15th February 2009

Queensland businesses are going to the wall at a faster rate then the Australian average - and many of them are company names that have been around for years. And experts warn the rapidly changing business environment has heightened the risk of directors trading while insolvent, a serious corporate crime that can result in hefty fines and jails.

 

The latest ASIC figures show companies entering administration increased nationally by 21 per cent in 2008 compared to 2007, but Queensland company failures increased by 36 per cent over the same period.

 

Dozens of companies across every sector have gone to the wall since mid-2008.

 

CPA Australia policy adviser John Purcell said the rapidly changing business environment meant that some directors - knowingly or not – would want to avoid the same fate.

 

“They are at significant risk of seeking to try and trade out of circumstances and expose themselves to personal liability under insolvent trading rules,” he said.

 

Paul Sweeney from SV Partners said some directors were still trading while insolvent, and he only expected the practice to increase.

 

For the first time in five years, he said directors were coming to him saying they had had enough and did not want to continue in business.

 

Matthew Joiner from accounting form PKF said the majority of loan defaults appeared to be related to the construction and property sectors of the economy.

 

He added that businesses appeared to be more highly geared than in the last December quarter, compared to 123 companies in December 2007.

 

Companies that do go into some sort of insolvency administration are almost guaranteed to be broken up and sold, with the proceeds going to creditors.

 

In Queensland, those waves of company failure and job losses continue to shock.

 

Raptis Group closed its doors to try to restructure the company and fight its way out of a $1billion hole.

And regional airline MacAir has closed its doors.