“You must be SO busy!”

The question we have been asked so many times since the COVID pandemic hit.

Given the huge disruption to our lives that COVID has caused, and the resulting uncertainty, financial mayhem was predicted. The speculation of a tsunami of insolvencies dominated conversations and the media.

In response, the Government took fairly immediate action to implement temporary protections and provide financial support via JobKeeper and other measures.

So the answer from us, and the insolvency profession in general, is: No, we are not busy, in fact we are the quietest we have been for 20 years!

Companies entering an insolvency process:

The trends with personal insolvency have generally matched corporate insolvency appointments.

Key statistics:

• For the March 2021 quarter corporate insolvencies were 44% lower than for the same quarter in 2020.
• The 12-month rolling average of corporate insolvencies to 23 May 2021 is down 47.3% on the previous year.
• Corporate insolvencies for 2021 have not been at such low levels since 2000.
• Personal insolvencies reached a record low in the fortnight to 10 January 2021.
• For the March 2021 quarter personal insolvencies were 53% lower than for the same quarter in 2020.

The current position is:

• Consumer confidence appears to be at record highs.
• We are experiencing strong improvement in unemployment numbers.
• Many credit managers are reporting that their receivables are in the best shape in recent memory.

But as we move into a new financial year there are now strong countervailing forces which surely mean this position will change:

• The end of the temporary protections and government stimulus measures.
• The ATO’s move to push for up-to-date lodgements and a gradual return to debt recovery action.
• The on-going necessity for sporadic, albeit short, lockdowns.
• The lack of fundamental change in the underlying position of previously unviable or non-performing businesses.

The question is how quickly and how far will the tide eventually go out?

And when it does, how many will be left washed up on the beach? And who has been swimming naked?