Business man doing the books at a restaurant
Business man doing the books at a restaurant

‘Zombie businesses’ starting to collapse: Bombshell report

Queensland has recorded the highest rate of company administrations across the country following the first round of JobKeeper cuts.

New data from credit reporting bureau CreditorWatch reveals signs of stabilisation in the Australian business sector.

According to the monthly CreditorWatch Business Risk Review, the number of businesses entering into administration rose nationally for the first time since June, up 11 per cent in September.

Queensland recorded a 24.1 per cent increase in business administrations in September, following a fall of 25.4 per cent in August.

Victoria recorded a 23.8 per cent increase in administrations after a 49.3 per cent drop in August.

New South Wales' administrations decreased 1.6 per cent last month on the back of a 34.3 per cent fall in August.

The number of business defaults increased by 23 per cent in September - the first increase since May 2020.

CreditorWatch CEO Patrick Coghlan said the default and administration increase suggested business owners had become aware of their perilous situation.

"The slight rebound in business default and administration figures suggests that some of the so-called zombie businesses - those reliant on government support for survival - are waking up to the reality of their situation and shutting up shop," he said.

"Seeing businesses enter into administration is never something you want to celebrate. "However, September's increase in default and administration rates does indicate that some businesses which have been reliant on government support are starting to accept the reality of their situation and are taking steps to settle with their creditors."

Mr Coghlan said it was vital businesses that are "doomed to fail" do not continue operating and take "healthy companies down with them".

"The longterm trend is that zombie companies will continue to survive on government support and so the next six months are crucial in determining what position we start our economic recovery from," he said.


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