By Vanda Carson
THE nation's corporate undertakers are preparing for a wave of insolvencies over the next three months as the economic crisis deepens.
Insolvency firm PKF predicts more than one in every six companies could fail when the recession hits bottom, and the majority of these will be in NSW.
PKF's Sydney partner, John Lord, said yesterday it was not just small companies that were teetering on the edge of collapse. "I don't think we have seen the end of the big ones yet," he said.
The insurance company HIH holds the record for the nation's biggest corporate collapse, worth $5.3 billion, in 2001.
Recent high-profile collapses include ABC Learning and financial stocks such as Allco Finance, Babcock & Brown and several margin lenders.
But the bulk of collapses have included the manufacturing industry, pubs and clubs, concreters and home builders. Most were unable to service their debts when revenues started to fall.
Jack Bournelis, from the insolvency firm PPB, said small- to medium-sized businesses with turnover of less than $15 million a year were the most vulnerable.
He predicted fallout in the next three months as collapses usually lag six to nine months behind an economic downturn.
Mr Lord said historically twice as many companies fell over during a credit squeeze compared to during normal economic times.
"In good times, between 5 per cent and 8 per cent of companies fall over. When there's a recession or a depression, 12 per cent to 15 per cent fall over.
"So in the next three months, the numbers [of company failures] are going to jump across the board," he said.
Mr Lord liquidated the family-owned company of Alan Bond, the man who presided over one of Australia's largest corporate collapses.
Already the indications are there, with NSW leading the country in terms of the number of winding-up applications filed in the courts.
According to statistics compiled by PKF, 1066 companies nationwide were slapped with winding-up applications in the three months to March.
A winding-up application is usually the first step in the process of a company's demise. They are growing at a faster rate than before.
Mr Lord said the figures showed there was a backlog of companies set for liquidation in coming months. "They are on the way up … This is not looking like a you-beaut economy," he said, referring to NSW.
NSW leads the country with 56 per cent of all winding-up applications and liquidations - more than the rest of the country combined.
The number of voluntary administrations nationwide was also up by about 10 per cent in the past three months, to 518.
Voluntary administrations in Western Australia doubled in the past three months, but from a low base.
Already 29 companies have failed in the three months to March, up from 20 in the six months to December.
These figures come after figures from the Insolvency and Trustee Service Australia showed personal bankruptcies and insolvency rates are now higher than at any time during the recession of the early 1990s.
More than 6600 people went bust in the December quarter, up 6 per cent against the same period the previous year.
The number of people making debt agreements with creditors to avoid bankruptcy also jumped by 37 per cent.