The Rise of Technology Company Insolvencies in Australia and the Role of Software Escrow
Australia has experienced a sharp increase in corporate insolvencies over the past year, with technology companies among those heavily impacted. This trend underscores the growing need for proactive measures like software escrow to protect businesses from the risks associated with vendor insolvency. Below, we explore the latest insolvency statistics, their implications for the tech sector, and how software escrow can provide critical support in these challenging times.
Current State of Corporate Insolvencies in Australia
The latest data from the Australian Securities and Investments Commission (ASIC) reports a significant rise in corporate insolvencies during the 2024-2025 financial year compared to the record-high 2023-2024. Over 11,000 companies entered external administration or had a controller appointed in 2023-2024, marking a 39% increase from the previous year and the busiest period for insolvency practitioners since 2012-2013.
In the first seven months of 2024-2025 alone, more than 8,500 companies faced the same fate, projecting a total exceeding 14,000 by year’s end. The technology sector (Information, Media, and Telecommunications) saw a striking rise in insolvencies, with a 33% increase from February 2023 to February 2024, followed by a further 23% increase from February 2024 to February 2025
Key Statistics
Total Insolvencies: 11,049 companies entered external administration during FY2023–24. 14,000 companies projected to enter external administration during the current financial year.
State Breakdown:
New South Wales (NSW) led with 4,634 insolvencies.
Victoria (VIC) followed with 2,862 cases.
Queensland (QLD) recorded 2,036 insolvencies.
Construction and hospitality dominate insolvency statistics, technology companies have also faced significant challenges. Rising interest rates, difficulty in raising funding, inflationary pressures, and lingering effects of the COVID-19 pandemic have created an environment where many businesses struggle to remain solvent.
