A new wave of enforcement is building as major lenders return to the courts, while business failures remain stubbornly high.
Australia’s big four banks have swung back towards court‑based debt enforcement after a year of relative quiet, with new figures showing legal recoveries climbing alongside near‑record levels of insolvency appointments.
Drawing on the Alares dataset, Jirsch Sutherland reported that the major banks had stepped up their use of the courts to chase overdue exposures.
Instead of seeing a brief spike in activity, the data points to a more entrenched change in how creditors are responding to arrears.
Jirsch Sutherland partner Andrew Spring said the pattern in the latest numbers pointed to a longer‑term escalation.
“The data suggests this isn’t a short‑term spike, but a more sustained period of increased enforcement,” Spring said.
Spring also said that pressure was now coming from a broad mix of creditors and noted that banks, the Australian Taxation Office (ATO), and other providers of credit were all asserting their positions more forcefully.
In parallel, the figures also showed winding‑up applications continuing to climb, with non‑ATO creditors playing an increasingly prominent role.
ATO disclosures reshape how distress emerges
A central feature of the current settings is the way ATO tax debt disclosures are feeding into credit decisions, with the Tax Office under its transparency regime having the ability to publish certain business tax debts once thresholds and notification requirements are met.
Alares director Patrick Schweizer said the March data underscored how far that regime had expanded and how it was influencing other creditors’ behaviour.
“March saw further increases in the ATO’s business tax debt disclosures, with more than 35,000 businesses now subject to ATO reporting,” Schweizer said.
He added that this level of visibility was actively shaping the way lenders and suppliers responded to arrears and that the public signalling about tax debts often served as the trigger for a wider round of action.
“Tax debt transparency was reaching unprecedented levels, which often acted as a catalyst for other creditors,” he said.
“Greater visibility around tax debt means issues can surface more quickly, not just for the ATO but for other creditors as well.
“This can shorten the time frame for businesses to respond and, in some cases, prompt earlier enforcement action from multiple parties.”
Restructuring under strain as formal actions climb
Small business restructuring (SBR) usage has levelled out after falling back through 2025, suggesting the initial surge in take‑up of the regime had passed.
At the same time, voluntary administrations have risen sharply and are now running at around twice their pre‑2023 pace.
Spring said that despite the slowdown in new SBR appointments, the mechanism continued to offer a way forward for operators.
“We’re continuing to see viable businesses use SBR to stabilise and restructure,” he said.
Payday Super to narrow cash flow buffers
On top of current enforcement settings, upcoming policy changes are expected to further restrict the flexibility some businesses have used to manage cash flow.
Spring said the introduction of Payday Super, which will require superannuation contributions to be paid at the same time as salary and wages, could “bring forward” the point at which distressed businesses run out of room.
“Measures such as Payday Super will remove some of the timing flexibility businesses have historically relied on,” he said.
“For those already under strain, that has the potential to bring forward financial distress rather than defer it.”
[Related: Insolvencies remain at elevated levels: CreditorWatch]
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