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‘Companies will face larger financial headwinds than in the GFC,’ says insolvency partner

One partner foreshadows the bleak outlook for companies for 2023, predicting a sharp rise in insolvencies. 

user iconJess Feyder 24 March 2023 Big Law
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National firm Taylor David is an internationally recognised leader in restructuring, bankruptcy annulments and insolvencies.

The firm is “sounding the alarm” on the number of insolvencies predicted to hit the Australian economy in 2023 and warns that the number of companies that will face financial headwinds is likely to be significantly larger than during the global financial crisis (GFC). 

Partner Scott Taylor has foreshadowed that the financial uncertainty that Australian businesses are set to face — across all sectors — is only just beginning and will exceed the worst of the global slowdown seen in 2008. 


Mr Taylor’s forecast echoes a sentiment expressed earlier this year by Hamilton Locke’s head of restructuring and insolvency, Nicholas Edwards, that insolvencies are set to rise — although Mr Taylor paints a much bleaker picture. 

Mr Taylor stated: “In many ways, what we’ve seen over the last six months is the tip of the iceberg.

“When you start seeing global banks getting anxious, being sold off or collapsing, it’s a clear indication of wider uncertainty, with more to come.”

“Global markets have been struggling since the middle of last year, and they still have a long way to go,” stated Mr Taylor. “Consumer confidence has declined.”

“What happens is that people become nervous and start selling down. Term deposits are generating a more certain yield than the stock market.” 

Mr Taylor said that he expects the impact of insolvencies to “be felt across most economic sectors, including construction, manufacturing, and logistics”. 

“Cyclically, these sectors are prone to insolvencies,” he noted.

The Australian Financial Security Authority (AFSA) found that personal insolvencies increased in January 2023. During that month, there were 772 new formal personal insolvencies, rising from 612 in December 2022. 

Mr Taylor noted that interest rate rises, inflation and cost-of-living pressures are all starting to have a downstream impact on the Australian economy, leading many businesses, big and small, to cut back or close entirely. 

“Additionally, over 50 per cent of household fixed-rate mortgages are estimated to expire in 2023,” Mr Taylor continued. “These increased mortgage repayments will have a significant impact on households and the wider economy.”

Mr Taylor said that with the COVID-19 rescue package payments and tax concessions at an end — the real financial impact of the post-pandemic period had started to hit the balance sheets of all businesses.

“The Australian Tax[ation] Office quite rightly showed some leniency during the COVID-19 period; however, there are many businesses that have not paid tax for the last two years,” he noted. 

“With the ATO now back in enforcement mode, it’s inevitable that many of these businesses will be turning off the lights for good.

“In a practical sense, there are consequences for business owners who have swept their financial turmoil under the rug.”

Taylor David is urging businesses to be proactive before it’s too late, the firm said in a statement. 

Mr Taylor continued: “What we’ve seen is well-informed and well-advised clients who come to firms like ours before issues turn terminal.

“We can provide advice, restructure, and potentially turn them around.

“It is our goal to ensure that our clients are well-equipped to navigate the challenging financial environment ahead.”