(Image: Adobe)

A web of red ink is spilling out across Australia, dormant but deadly. Companies that would normally have gone broke are instead operating, taking on debts they will never be able to pay back.

“Anybody you’re doing business with might be broke and you just don’t know it,” says John Winter, CEO of the Australian Restructuring Insolvency and Turnaround Association.

As the next graph shows, the number of companies that have gone broke this year in Australia is well below the historic norm. That is decidedly not because the economy is flourishing. Instead it is due to law changes -- changes designed to prevent catastrophic collapse but which are now turning corrosive.