Inside WA’s insolvency landscape: The challenges and opportunities

Economic pressures and heightened ATO enforcement are squeezing Western Australia’s insolvency landscape – and not even the mining sector is immune. Jimmy Trpcevski, who heads up our WA division, WA Insolvency Solutions, shares his insights on the challenges.

The economic climate in Western Australia is putting increasing pressure on businesses, reflected in a rise in insolvency appointments across the state. Since the start of the year, insolvencies have steadily increased, but what’s even more telling is the sharp rise in early-stage enquiries. Directors and their advisers are reaching out sooner, providing an opportunity to preserve value and explore restructuring options before things escalate.

These trends are being driven by a combination of sector-specific and broader economic pressures. Retail and hospitality continue to struggle under the weight of reduced discretionary spending and rising operational costs, while the construction sector grapples with the fallout from fixed-price contracts, cost overruns, and ongoing supply chain disruptions.

Even the mining services sector, typically a strong performer due to WA’s reliance on mining, is seeing a lift in insolvency activity. Yet while mining continues to be a key economic driver, it’s not without consequences: wage inflation and strong demand for skilled labour are drawing workers away from other industries, creating talent shortages that further challenge already strained businesses.

Layered over these industry-specific challenges is a challenging national economic backdrop. The cost-of-living crisis is impacting both businesses and consumers, eroding spending power and placing pressure on cash flow – especially for SMEs, which make up a large portion of the businesses we assist. These combined factors are pushing more businesses to seek help earlier, which is encouraging, as it opens up a wider range of restructuring solutions.

The growing impact of internal conflicts

Another emerging trend is the increasing number of insolvencies linked to internal disputes among directors, shareholders, or business partners. These businesses may be financially sound, but disagreements and misaligned visions can lead to deadlocks and, ultimately, formal appointments. This issue is especially prevalent in family-owned and private companies.

These pressures are reflected in the breadth and complexity of matters we have handled in recent months. Over the past year, our team has managed complex appointments including Chemex and Hipura, Karaluya Contracting, and Unicare, alongside numerous successful Small Business Restructures (SBRs). Demand for SBRs remains strong due to their speed, affordability, and ability to deliver better outcomes for both businesses and creditors. Larger corporates are also increasingly exploring Safe Harbour provisions to protect viable parts of their operations during difficult periods.

It always depends on the individual situation, the timing, and the desired outcome. In many cases, Voluntary Administrations (VAs) continue to provide a highly effective mechanism for restructuring and value preservation. We’ve also implemented creative strategies such as VAs to Deeds of Company Arrangement (DOCA) to Creditors’ Trust structures, and VAs leading to sales of incorporated associations – approaches that have helped rescue viable businesses and maximise creditor returns.

ATO enforcement and regulatory pressures

As widely reported, the Australian Taxation Office has stepped up enforcement activity, making it a key trigger for insolvency appointments. Directors receiving Director Penalty Notices (DPNs) often underestimate how quickly personal liability can arise – typically within just 21 days. The ATO is also increasing its use of garnishee notices, external debt collectors, and credit bureau reporting of unpaid tax debts, all of which can severely hamper a business’s ability to continue trading.

In most cases, the ATO acts most decisively where there is poor compliance, lack of communication, or failure to seek professional advice. Businesses that engage advisers early tend to be better positioned to negotiate or restructure before matters escalate.

Strategic growth and community involvement

To better serve WA businesses, we are looking to continue to expand our regional footprint with new offices and stronger community engagement, especially in areas facing economic challenges. Investments in technology and streamlined processes enhance our ability to deliver timely, tailored support.

As WA’s economic landscape evolves, we remain focused on delivering clear, practical, and forward-looking solutions – whether through restructuring, recovery, or early advisory support.

Jimmy Trpcevski
Managing Partner
WA Insolvency Solutions