Monthly Credit Risk Insights by Alares

Written and provided by Alares.

Insolvencies in April remained near all-time monthly highs and were almost double pre-pandemic levels, highlighting the ongoing insolvency catch up.

Overall numbers suggest a remaining 2,800 additional insolvencies above typical levels still to come.  At the current monthly run rate, the insolvency catch up will continue to play out through the remainder of 2025.

Key highlights in April

• Insolvencies remain near all-time monthly highs.
• SBRs saw a drop in April, in-line with the trend from 2024.
• The ATO remains the dominant driver, while the big four banks continue to ease off the pressure.

Insolvencies in April remain near all-time monthly highs

April insolvencies were almost double historical levels, representing that largest percentage increase seen to-date.

2025 continues to track above the previous highs from 2024

Monthly insolvencies numbers in 2025 continue to consistently track above 2024 numbers, which themselves represented all-time highs.

Small business restructuring (SBR) appointments dropped in April

This coincides with a similar drop in April last year after a spike in March.  Last year saw a continued increase in SBRs from May onwards – stay tuned to see if the same trend plays out again this year.

The ATO remains the dominant driver, still with no signs of slowing down

ATO initiated Court recoveries continue to increase year-on-year, highlighted in April by a noticeable increase in personal bankruptcy sequestrations.

This comes off the back of a reported record number of directors penalty notices, showing that the ATO is increasing holding business owners and directors personally to account.

Similarly, the ATO’s disclosure of business tax debts remains in full swing

More than 30,000 businesses remain subject to disclosure of tax debt reporting.  However, in a potential positive sign, it appears that the total number of businesses may have momentarily peaked.  Stay tuned for next month’s update to see if this trend continues.

Meanwhile the big four banks are showing a continued year-on-year reduction in Court recoveries

Overall numbers remain historically high, however the downward trend may be a sign that borrowers are starting to adjust to higher interest rates.

Winding up applications continue to rise, a further indication that more insolvencies are on the horizon

Winding up applications in April showed a significant year-on-year increase and were well above historical levels, led by a strong increase in non-ATO initiated winding ups.

Creditor-initiated bankruptcy applications continue hovering near multi-year highs

Again, ATO initiated bankruptcy applications showed a significant year-on-year increase.

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For better insights into financial and reputational risks impacting your customers and suppliers, please get in touch

Patrick Schweizer

Director, Alares
w: www.alares.com.au
e: patrick@alares.com.au
m: +61 418 739 921